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Audit Report - 2011 • SALINAAfrport • Chairmen Vice Chairman Secretary Treasurer Past Chairman Dr.Randy Hassler Baran Nemchafer Jeff Maas Angela Coble Jeff Thompson Executive Bisector Timothy F.Rogan,A.A.E. Mgr.of Administration&Fnenon Michelle R.Swanson C.M. Mgr.of Willies&Construction Kenny Bicker Mgr.of Public Affairs B Communications Melissa Mc Coy Board Attorney Greg A.Bengtson July 3, 2012 Norman Jennings, City of Salina 300 W.Ash Salina, KS 67401 RE: Salina Airport Authority 2011 CAFR(Comprehensive Annual Financial Report) Dear Norman: Transmitted herewith is a copy of the Salina Airport Authority's Comprehensive Annual Financial Report for the year ended December 31, 2011. Please contact Michelle R. Swanson, Mgr. of Administration and Finance, should you have any questions regarding our report and thank you for your continued interest and support of the Salina Municipal Airport and Airport Industrial Center. Sincerely, SALINA AIRPORT AUTHORITY S c drC& W. Eattont.. Gretchen K. Engstrom Administrative Assistant Enclosure F:\Public\MsOffsce\Multi Aplication Folders\CAFR\2011\CAFR_Transmittal,doc /Zola.A usupet SLNAirport 3237 Arnold/Salina,KS 67401.8190/785.827.3914/Fax:785.827.2221 SALINAA rPo www.salinaairport.com yn(e.M1.s—E SAIL)lNAAfroort I ‘‘'''"ivi.---k r ,,,,,,,,...-.-..--,,,:,:,...:::::,,,-..,..:-.,,,::::::::::,..,;:::: .::::,,....,..:::,::::::::;;!,:;.:,,..:-.::,-7.:.:,:i::::e..:::,7::::::,... .,::::::::::..,:,i,„..",,,,,,,:::,,:„..,,,,-;,,-,,::::::::::,-..:,) -17-71',7."':-Pl"'i-C:;':;'':',611'2.:::-::?:-?::r..;:: ;;;5'''':',..! I 3 , i ' x'M"Cw' a-5` av4 s S 4 t, q r 4 � .. ..__ .. .__ COMPREHENSIVE ANNUAL FINANCIAL REPORT of the ISALINA AIRPORT AUTHORITY A Component Unit of the City of Salina,Kansas r For the Fiscal Year Ended December 31,2011 i s 1 I 1 IPrepared by the Management of the I Salina Airport Authority www.salinaairport.com ICUSIP#794760XXX I I 3237 Arnold I Salina, KS 67401 I 785-827-3914 www.salinaairport.com I www.flysalina.com I ISALINA AIRPORT AUTHORITY TABLE OF CONTENTS I COMPREHENSIVE ANNUAL FINANCIAL REPORT IFor the Fiscal Year Ended December 31, 2011 IINTRODUCTORY SECTION I Letter of Transmittal 1-5 Principal Officers 6 Authority Staff Members 7 IOrganizational Chart 8 Certificate of Achievement 9 Salina Municipal Airport Aerial View 10 FINANCIAL SECTION IIndependent Auditors' Report 11-12 Management's Discussion and Analysis 13-20 I Statements of Net Assets 22-23 Statements of Revenues, Expenses and Changes in Net Assets 24 I Statements of Cash Flows (Direct Method) 25-26 Notes to Financial Statements 27-43 I Supplemental Information Schedules of Revenues, Expenses and Changes in Net Assets 45-47 Capital Expenditures 48-49 I General Obligation Improvement Bonds - Series 2001-A 50 General Obligation Improvement Bonds - Series 2002-A 51 General Obligation Improvement Bonds—Series 2005-A 52 I General Obligation Improvement Bonds— Series 2007-A 53 General Obligation Improvement Bonds— Series 2009-A 54 General Obligation Improvement Bonds— Series 2009-B 55 I General Obligation Improvement Bonds—Series 2011-1 56 General Obligation Improvement Bonds—Series 2011-B 57 Special Assessment Debt-Street and Utility Improvement 58 I Special Assessment Debt-Sanitary Sewer Extension 59 Financing Lease Payable 60 Insurance in Force 61 I I I I I I STATISTICAL SECTION I Statistical Table of Contents 63 Total Annual Revenues, Expenses and Changes in Net Assets History 64-65 I Change in Cash and Cash Equivalents History 66-67 Capital Expenditure History 68 General Obligation Debt Service Coverage 69 1 Local Government Mill Levy Rates, Direct and Overlapping 70 Principal Customers 71 Mill Levy Revenue 72 Air Traffic, Fuel Flowage, and Enplanement Trends 73 Principle Employers 74 Government Employees by function 75 Saline County Population and Economic Statistics 76 Saline County Largest Taxpayers and Tax Collection Statistics 77 ' COMPLIANCE Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 79-80 1 I I I I I I I ii I, • o n (F.:: 1 n t r o d u c t...____,.. . . ._.... . , , J , , . . „..,,,,,_ . t , ,..,., , • , . „.. . • ., * 1 i. a4 I — 4_ 1! y � { t �6s 1 ' • t ,r . "<� • a, s \ :,: .,5� . , . :,, -- Salina, Kan., (May 17, 2011) — Pardon our noise it's the sound of freedom! . Once again the sky of Salina may be louder than usual as our neighbors to the north bring CF-18 Hornets from Canadian Air Force 425 Tactical Fighter Squadron to take advantage of the training and basing opportunities at the Salina Airport Authority and the Smoky Hill Weapons Range. The"Nighthawks"are supporting the Canadian Army during forward air controller training. The Army FACs will be training to serve as the eyes on the ground for the Air Force pilots. Through a number of methods, FACs communicate with the inbound pilots, guiding them to destroy enemy targets and minimize collateral damage. , Upon completion of their training, Canadian soldiers will deploy to Afghanistan. The Salina Airport Authority is proud to aid the fighting men and women of Canada as they prepare for combat deployments in support of U.S. and Allied Forces. SALINAAIrP0t � � 1, Chairman Vice Chairman Secretary Treasurer Past Chairman Or.Randy Hassler Daran Neuschafer Jeff Maes Angela Coble Jeff Thompson Executive Director Timothy F.Rogers,A.A.E. Mgr.of Administration&Finance Michelle R.Swanson,C.M. Mgr.of Facilities&Construction Kenny Bicker Mgr.of Public Affain&Communications Melissa McCoy Board Attorney Greg A.Bengtson i June 20, 2012 s Salina Airport Authority Board of Directors 3237 Arnold Ave. Salina,KS 67401 To the Board of Directors of the Salina Airport Authority: The Comprehensive Annual Financial Report(CAFR) of the Salina Airport Authority(the "Authority") for the fiscal year ended December 31, 2011 is hereby submitted in accordance with the Kansas Statutes 1 Annotated(K.S.A. 27-324). As required by the statute,the City of Salina will be furnished copies of the j Authority's 2011 CAFR. Responsibility for both the accuracy of the data presented and the completeness and fairness of the presentation, including all disclosures,rests with the Executive Director of the Authority. To the best of our knowledge and belief, the data as presented is accurate in all material aspects, is presented in a manner designed to fairly set forth the fiscal position and results of the operation of the Authority as measured by its financial activity, and all disclosures necessary to enable the reader to gain maximum understanding are included in the report. This CAFR is presented in accordance with generally accepted accounting principles (GAAP) and pursuant to K.S.A. 27-324, an audit of the books, accounts and financial statements has been completed by the Authority's independent certified public accountants, Clubine and Rettele, Chartered. The independent audit is in accordance with the Kansas Municipal Audit Guide, the Government Auditing Standards issued by the Comptroller General of the United States, and, if applicable, the provisions of the Office of Management and Budget Circular A-133, "Audits of States, Local Governments and Nonprofit Organizations". 1 GAAP requires that management provide an overview and analysis to accompany the fmancial statements in the form of a Management Discussion and Analysis(MD&A). It is recommended that this letter of transmittal be read in conjunction with the MD&A, which can be found immediately following the report of the independent auditor in the Financial Section of this report. REPORTING ENTITY The Salina Airport Authority is a body corporate and politic. The Authority was created by the City of Salina in April 1965 (Sec. 4-16, Salina City Code) pursuant to the authority granted by the City by the surplus property and public airport authority act of the State of Kansas (K.S.A. 27-315 et seq.) The Authority was created for the purpose of accepting as surplus property portions of the former Schilling A.F.B., which was closed by the United States Department of Defense in June 1965. By quitclaim deed the Authority received over 2,900 acres of land and numerous buildings for the purpose of operating and 1 1 1 I INTRODUCTORY FY 2011 I developing the Salina Municipal Airport and the Salina Airport Industrial Center. The Authority is managed and controlled by a five-member Board of Directors appointed by the Salina City Commission. I The Board appoints the Executive Director, who is the chief executive officer of the Authority. The Executive Director hires the remaining employees of the Authority. The Executive Director and his staff of nineteen employees manage and operate the Salina Municipal Airport and the Salina Airport Industrial Center. The Salina Municipal Airport is the only commercial service airport serving Salina/Saline County and the 24-county area, which comprises North Central Kansas. The Airport also services the corporate, business,private aviation and flight training needs of industry, business and individuals in the area. The Airport is also used by Kansas State University at Salina (KSUS). The campus of KSUS is located adjacent to the Airport. The college offers degrees in professional flight training, airframe and power plant maintenance,and avionics technology. The Salina Municipal Airport and Airport Industrial Center is home for over 70 businesses and organizations. Forty-five of the businesses and organizations are tenants of the Authority. One of the primary functions of the Authority is to facilitate the continued growth of jobs and payroll at the Airport and Airport Industrial Center. The Authority works in partnership with the City of Salina, Saline County and the Salina Area Chamber of Commerce for the retention of existing business and industry and the recruitment of new business and industry. ECONOMIC CONDITIONS AND OUTLOOK Local Economy The Salina/Saline County economy has continued to demonstrate economic strength, as compared to other regions of the state. In fact, Salina has long been considered the employment hub of North Central Kansas with nearly 5,000 employees commuting daily to Salina from outside the county. The hub draws from a large 13-county labor pool of 44,919 individuals. Even during these times of economic challenges, the area's unemployment rate has remained below the national average. During 2011 the County's unemployed rate was below the state average every month except December; during which time it was equal to the State's rate ending the year at 6.1%. Salina's visitor count during 2011 is estimated at over 610,000. Recently, lodging revenue reached a record high of over $20 million. Growth in the areas of manufacturing, transportation, fmance, real estate, insurance, services and retail trade, confirm Salina's position as one of Kansas' strongest regional economic centers. Collectively, Salina retail sales are pushing above$900,000 million and towards the$1 billion threshold annually. Salina is the trading center of a 38-county area in North Central Kansas. In the past year, retail sales have increased by 4.9%. Recent retail sales activity in Salina increased at a faster pace as other areas were declining. Salina has a high pull factor of 1.53 reflecting the overall strength of the community as a regional retail draw. Major retail firms opening or expanding in the past few year include Menard's, Kohls, PETCO, Lone Star Steakhouse, Old Navy, Hobby Lobby, Justice, Logan's Roadhouse and Ashley Furniture Store. I 2 1 I I INTRODUCTORY FY 2011 I Economic Condition of the Airport and Airport Industrial Center tAs of December 31, 2011, over 70 businesses and organizations at the Salina Municipal Airport and Airport Industrial Center employed over 3,700 employees with a combined payroll of nearly $140 million. Future Economic Outlook 1 The future economic outlook for both Salina and the Authority continues to look favorable. Continued growth in service,retail and manufacturing sectors is expected. The Salina Area Chamber of Commerce forecasts that approximately 700 net,new jobs per year will be added to the economy over the next two to three years. Salina Aviation Service Center businesses including Kansas State University at Salina continue to work on facility expansion plans. Salina Airport Industrial Center businesses including Schwan's Food Manufacturing Inc. and the Kansas Army National Guard at Salina, also continue to work on facility expansions. Recently two new businesses began operations in the Airport Industrial Center; Universal Forest Products and Tischlerie--Fine Woodworking, LLC. Collectively,these expansions will result in additional jobs and payroll. The Salina Airport Authority in partnership with the Salina Area Chamber of Commerce, the City of Salina and Saline County, continue to execute an economic development strategic plan that includes specific goals and tasks intended to result in job growth, increased primary jobs payroll, new capital investment and the leasing of available space at the Airport Industrial Center. The Airport Authority contracts the services of Zimmer Real Estate Services and Mr. James Gregory, James Gregory Consultancy, for national and international recruitment of aerospace business to locate at the SLN Aviation Service Center. IINITIATIVES AND DEVELOPMENT The top initiative will be the continued leasing of facilities vacated as a result of Hawker Beechcraft Corporation (HBC) after closing its Salina operations in 2012. As of May 2012, the Salina Airport Authority had already leased 60,000 sq. ft. of the space vacated by HBC at or above fair market rental rates. Leasing those facilities will help replace the jobs and payroll lost by the Salina community. It will also mean maintaining and replacing the lease revenue stream to the Airport Authority's operating budget. This is vital in order for the Airport Authority to continue to provide the services necessary to operate a world-class airport and airport industrial center. The completion of capital improvements to existing facilities and the Airport Industrial Center are also a top priority. There is a Capital Improvement Program in place that details more than$60 million worth of projects to take place within the next five to ten years. These improvements will aid the Airport Authority in filling unused space and continue to offer the superior services and facilities the aviation community has come to expect from Salina. I 1 3 i 1 INTRODUCTORY FY 2011 I Other major initiatives include: 1 I, Development of a new Salina Municipal Airport Master Plan. This report will serve as the guide for airport improvement projects and development for the next 20 years. $ Construction completion and opening of a new Aircraft Rescue and Fire Fighting Station. $ Continuation of essential air service development program and activities. $ Initiate Unmanned Aerial Systems and Remotely Piloted Vehicle Operations from the Airport in coordination with K-State Salina and the Federal Aviation Administration. $ Maintain intense momentum in recruiting businesses to the Salina Aviation Service Center. ;. Reach a settlement agreement with the Department of Justice to fund the cleanup of environmental contamination caused by military operations at the former Schilling Air Force Base. $ Completion of concept design and feasibility work for the Wings Over Salina Air Museum. $ Establishment of new Air Traffic Control procedures to take advantage of the improved radar coverage for civilian and military aircraft operations in the airspace around Salina. $ Continuation of support for K-State Salina and their Applied Aviation Research Center and Unmanned Aerial Systems Program Office. $ Support continued growth and development of the Kansas National Guard Great Plains Joint Training Center. $ Hangar 606 Renovations. This hangar was formerly leased to Hawker Beechcraft and is expected to be used to house two important operations; a dedicated forward operating location for military units deployed to Salina for training and a permanent tenant which intends to establish a flight training facility for high performance turbine aircraft. $ Upgrades to the Airport's 300,000 gallon underground storage tank fuel farm including enhanced metering and monitoring systems, fuel filtering system and water separators. $ Implement the recommendations outlined in the 2010 USDA wildlife hazard assessment report for an aggressive wildlife mitigation program for the Salina Airport. LONG-TERM FINANCIAL PLANNING Increasing the Authority's unreserved,undesignated fund balance has been a priority of the organization. 1 The Authority Board of Directors has a stated plan of establishing the Authority's cash reserve fund equal to six month's operating expenses or $1.2 million. The Authority is on track to reach $1 million by the end of 2012, $1.1 million at the end of 2013 and the goal of$1.2 million by the end of 2014. 1 Also, as part of the strategic plan of recruiting business and industry to fill available facilities vacated by HBC, the Authority has developed a systematic method of evaluating projects including definitive I trigger points, lease pro-forma requirements, lease calculation methodology and other qualitative measures prior to capital improvement projects. 1 4 1 I IINTRODUCTORY FY 2011 IGFOA CERTIFICATE OF ACHIEVEMENT 1 1 The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Salina Airport Authority for its comprehensive annual financial report for the fiscal year ended December 31, 2010. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently Iorganized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. IA Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. III ACKNOWLEDGEMENTS IThe support of the Authority's Board of Directors has been instrumental in the preparation of this report. The Board has been actively involved in the preparation and review of this report and is committed to Iresponsible and progressive financial reporting. Also acknowledged is the assistance of the Authority's auditor, Clubine and Rettele, Chartered, the I Authority's accounting advisor, Thomas G. Arnett, CPA, Saline County Clerk's Office, Dennis Lauver, President of the Salina Area Chamber of Commerce, Rod Franz, Director of Finance for the City of Salina, the University of Kansas Institute for Public Policy and Business Research and the Kansas IDepartment of Human Resources Labor Market Information Services, in the preparation of this report. Res ctfully submitted, ILri-el‘dte k.5A-6'4-'7cr " Timothy F. Ro ers,A. . . Michelle R.Swanson I Executive Director Manager of Administration and Finance Salina Airport Authority Salina Airport Authority 1 cc: The City of Salina Board of Commissioners I 1 I I 1 5 I I INTRODUCTORY t 2 II I SALINA AIRPORT AUTHORITY I PRINCIPAL OFFICERS AS OF DECEMBER 31,2011 I ..`r rta-Me,;c:dint.,/ . ... .. (.. , ,,,,, _ ,ds. 1 .,, ,,,. , . . , , y , v. ■ ,_3 I 1 I .:y r P - . At oto. ,.4 Ailie Pictured from left to right: 1 Jeff Maes,Treasurer;Dr.Randy Hassler,Vice Chairman;Jeffrey R.Thompson,Chairman; Timothy F.Rogers,Executive Director;Julie Sager Miller, Past Chairman;and Daran Neuschafer,Secretary. AUTHORITY'S COUNSEL I Greg A. Bengtson Clark,Mize&Linville, Chartered Salina,Kansas AUTHORITY'S BOND COUNSEL I Gilmore&Bell Kansas City,Missouri I AUTHORITY'S FINANCIAL ADVISOR George K. Baum&Company I Kansas City,Missouri IAUTHORITY'S AUDITOR Leslie M. Corbett, C.P.A. Clubine&Rettele, Chartered Salina,Kansas 6 1 I 1 INTRODUCTORY rti 201 I I ' SALINA AIRPORT AUTHORITY Staff Members as of December 31,2011 i ADMINISTRATIVE STAFF Timothy F. Rogers, A.A.E. Executive Director Michelle R. Swanson, C.M. Manager of Administration and Finance David"Gunner"Wiles Manager of Operations Kenny Beiker Manager of Facilities Melissa L. McCoy Manager of Public Affairs and Communications Donald C. Kneubuhl Manager of Special Projects Kasey L. Windhorst Executive Assistant Gretchen Engstrom Administrative Assistant I IFACILITY MAINTENANCE and OPERATIONS Loren Carleton—Team Leader Ron Boyd Rob Pejsha Kim Colby Dale Mattison ' AIRCRAFT RESCUE AND FIREFIGHTING and SAFETY and SECURITY David Nease—Team Leader Alan Mason Andrew Harper Matthew Rittel Alan Anderson I I I 1 7 I I ti wo ya _ `m Ax c d aH ° c° Na cm s wa a a co- m� m c- mU m01 ,- c.co 0 a1 R 0� I- 2 , CO 0 C1� u) a) .. o z WU) , N NK .� m m O Q m.. C c.c a x a Ua �� I y.Y ._ a 'tj m , LL ei w.c 0 c H c N — c1� Uo C MNN V V 03 EL �� m N N N N N f 7 n 0 a s �.-.-._._. c / 0 0 0 0 0 m e C G _ O O000.`:- '� Q' �W V c 0 ys •� to. Kt c y �oaoQo h : u I ` � O l 1 d ��G cE IIZ �• u) a) , U '� N— U _ 'O — d' V Y A '00« R 6.N m 0 CO '�T Ga LL CO m w C L E Y U CO e.-.. 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I in 0 R y iny.c c otl m N m r E_ Q5 .' m c m K Y Y 2 W i . / 8 1 I Certificate of 1 Achievement 1 for Excellence in Financial Reporting Presented to Salina Airport Authority Kansas For its Comprehensive Annual Financial Report for the Fiscal Year Ended 1 December 31, 2010 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement I systems whose comprehensive annual financial reports(CAFRs)achieve the highest standards in government accounting and financial reporting. otE Opp,.{, 47•66- // �Ii7FDTAt'ES t ff s T ° President v4:9 SEAL_ 0 CkiEA6ti iilkelfre:AtP"" Executive Director I 1 9 I INTRODUCTORY FY 2011 I SALINAAfrport I I I_. F 1 ,V.Tye [ { ` 4 ow i[y < q ,t, k r � . I A �' � ' } try r '�i d� - I r fit _ °� . 1 qF Ott �� 1 111�;•h 4. • 1. I I / Aviation ism Ai..,-,24.1SLN/51ce {n,enter SALINAAC rt I I I 10 I Financi' al j >,.F ""`' ., h w„7,. 'fs"e' .`'1"R -fr.: 4 '' Y�, '�t` i+t '""k _7 wf 5 v 17 t' '`�Y: �3'-va. '. ?,• 't l' -. ¢� -,ww y�.. ,,fi r Pi£� ' - y r ti.'� �, Yfi�fc "C'1- 'gas. k z 's i ^,,, S 1_ •tf^`., i t t qak r r r C r t� x C-4 tf c r'� w ' ` D.u , , 7 . • � r i a Salina, Kan. (August 29, 2011)- Kansas State University Salina's unmanned aircraft systems program office has landed key authorization from the Federal Aviation Administration that will benefit program offerings and students. The office recently became one of only a few civil entities granted a certificate of authorization within Class D airspace from the Federal Aviation Administration. The authorization allows the program, based at the Salina Municipal Airport, to operate its unmanned aircraft, an Aerosonde Mk 4.7, in the ! 'I national airspace system. "K-State's certificate of authorization allows our students to practice handing control over to the next ground station, practice simulated lost-link procedures, and experience scenario-based mission deployments, all of which will prepare them for possible search-and-rescue mission deployments in the future," said Josh Brungardt, director of the unmanned aircraft systems office. "This certification of authorization enhances the unmanned aircraft training capabilities already available at K-State." IINDEPENDENT AUDITORS' REPORT CLUBINE& LE CHARTERED To the Board of Directors Salina Airport Authority I Certified Public Accountants We have audited the accompanying financial statements of Salina Airport Authority, a component unit of the City of Salina, Kansas, as of and for the years ended December 31, 2011 and 2010, as listed in the table of contents. These Ifinancial statements are the responsibility of the Authority's management. Our responsibility is to express opinions on these financial statements based on our Iaudits. We conducted our audits in accordance with auditing standards generally accepted Robert I. Clubine,C.P.A. in the United States of America and the standards applicable to financial audits II David A. Rettele, C,P.A pp Jay D. Langley, C.P.A. contained in Government Auditing Standards, issued by the Comptroller General of Jon K. sell,C.P.A. the United States and the Kansas Municipal Audit Guide, prescribed by the Leslie M.Corbett.C.P.A. Stacy J.Osner,C.P.A. Director of Accounts and Reports, Department of Administration of the State of IKansas. Those standards require that we plan and perform the audit to obtain Marci K. Fox,C.P.A. reasonable assurance about whether the financial statements are free of material John T. Millikin, C.P.A. misstatement. An audit includes examining, on a test basis, evidence supporting I Linda A.Suelter,C.P.A. the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall financial statement presentation. We Ibelieve that our audits provide a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all I material respects,the financial position of Salina Airport Authority, as of December 31, 2011 and 2010, and the changes in financial position and cash flows for the years then ended in conformity with accounting principles generally Iaccepted in the United States of America. In accordance with Government Auditing Standards,we have also issued our report I dated June 14, 2012, on our consideration of Salina Airport Authority's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. ' The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to 218 South Santa Fe P.O. Box 2267 provide an opinion on the internal control over financial reporting or on I Salina, Kansas 67402-2267 compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and important for assessing the results of our audits. ISalina Accounting principles generally accepted in the United States of America require 785/825-5479 that the management's discussion and analysis on pages 13 through 20 be presented Salina Fax I 785 t 825-2446 to supplement the basic financial statements. Such information,although not a part of the basic financial statements, is required by the Governmental Accounting Ellsworth Standards Board, who considers it to be an essential part of financial reporting for 785 1 472-3915 placing the basic financial statements in an appropriate operational, economic or I Ellsworth Fax 7851472-5478 historical context. We have applied certain limited procedures to the required 11 1 supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 1 Our audit was conducted for the purpose of forming opinions on the financial statements as a whole. The introductory section, the supplemental information in the financial section and the statistical section of the table of contents are presented for purposes of additional analysis and are not a required part of the financial statements. The supplemental information in the financial section is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections of the table of contents have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. CLUBINE AND RETTELE, CHARTERED I (-6/tine a4 d 4 , C d ' Salina, Kansas 1 June 14, 2012 I I 1 1 II 12 1 1 FINANCIAL fl Ii I ' MANAGEMENT'S DISCUSSION AND ANALYSIS ' The management of the Salina Airport Authority offers the readers of the Authority's audited financial statements this narrative overview and analysis of the financial activities of the Salina Airport Authority for the fiscal year ended December 31,2011. 1 AIRPORT ACTIVITY AND HIGHLIGHTS IThe Salina Air Traffic Control Tower(ATCT)ended 2011 having handled 69,207 aircraft operations. This represented a nearly 15%increase in total aircraft operations over the prior year. The total average ' increase over the prior year for all Kansas Airports with FAA contract towers was 3%. K-State Salina's expanded helicopter program on the airport has led the upward trend in air traffic. ' The highest year for the most recent 10-year period was 2002 at 95,801 aircraft operations. Salina continues to remain strong as a mid-continent refueling stop and has earned the recognition as"America's Fuel Stop". The Airport's two world-class fixed base operators (FBOs)and tenants of the Authority annually deliver 2.4—3.8 million gallons of fuel to thousands of business jets, government and military aircraft. In addition, Salina continues to remain strong as a base of operations for military and civilian flight training. The commercial airline industry is seeing improvements despite the challenges faced by the smaller carriers attempting to serve rural communities such as Salina through the Department of Transportation's (DOT) Essential Air Service Program. The 33% decrease in passenger enplanements from 2008 to 2009 was a result of Great Lakes discontinuing the daily flights to Denver that had brought about an increase in 2008 after they had transitioned to dual hub service. At the end of 2009, Great Lakes offered multiple weekday and weekend flights to Kansas City while arriving at the end of their two-year EAS contract. As 2009 ended, the Authority and the Salina community began working in partnership with the DOT to seek air carriers interested in providing air service to the residents of North Central Kansas for the next two- year EAS term and beyond. In early 2010, SeaPort Airlines was awarded the DOT EAS contract for Salina's air service and began ' three daily flights, six days a week between Salina and Kansas City and began to rebuild the market with excellent customer service, on-time performance,reliability and lower airfares. I I ' 13 1 I FINANCIAL F1 2011 During 2011, the Salina Municipal Airport's passenger enplanements increased 59% as a result of SeaPort's continued marketing and excellent customer service and performance. Further detail regarding the Airport's air traffic, fuel flowage and enplanement trends can be found in the statistical section of this report on page 73. The changes in the Authority's major airport activity indicators for the past three years are as follows: 2011 2010 2009 Enplanements - Scheduled Air Carrier& Charter Flights 2,705 1,698 2,447 % increase/(decrease) 59.31% -30.61% -33.38% Aircraft Operations -All Categories 69,207 60,451 65,062 % increase/(decrease) 14.48% -7.09% -9.10% Fuel Flowage - (gallons delivered) 2,386,670 2,763,990 2,481,585 I %increase/(decrease) -13.65% 11.38% -20.32% I AIRPORT INDUSTRIAL CENTER ACTIVITY AND HIGHLIGHTS I The Authority owns over 1 million sq. ft. of manufacturing, warehouse and office space at the Airport Industrial Center. As further described herein,the building and land revenue generated by the Authority's leasing activity constitutes a significant portion of the annual operating revenue budget. During 2011, building rents equaled$1,497,710 or 65% of operating revenue. At the end of 2011, the Authority had an occupancy rate of 44%in its building inventory, down significantly from the 82% in 2010. The decrease is a result of the closure of the Hawker Beechcraft Corporation division in Salina as discussed further in this report's Letter of Transmittal. I i I I I 14 U I FINANCIAL F 2011 ISUMMARY OF OPERATIONS AND CHANGES IN NET ASSETS I Even with the uncertainty in the aviation industry and the slow growth in the economy, the fmancial condition of the Authority has held steady in recent years. The Authority has effectively dealt with major cost increases in employee health benefits including medical insurance premiums, utility costs, I commercial property insurance premiums and other operating expenses. Fortunately, with the diversified revenue base,including building and land rental from the Authority's Industrial Center,total operating revenue has grown from$1.6 million in 2005 to$2.3 million in 2011. 1 2011 2010 2009 I Operating Revenues $ 2,306,965 $ 2,391,349 $ 2,098,576 Operating Expenses (2,156,529) (2,236,720) (2,220,128) I Excess before Depreciation and other non-operating income and expenses 150,436 154,629 (121,552) 407 2 Depreciation (2,407,566) (Z, 90,253) (1,748,348) IExcess (loss) before other non-operating Iincome and expenses (2,257,130) (2,135,624) (1,869,900) Other Non-Operating Income Iand(Expenses)net 840,573 688,037 387,831 I Loss before Capital Contributions (1,416,557) (1,447,587) (1,482,069) ICapital Contributions 457,227 1,172,507 3,770,558 Increase (Decrease) in Net Assets $ (959,330) $ (275,080) $ 2,288,489 I I I I 1 15 I I FINANCIAL n. 2.01 1 I SUMMARY OF OPERATIONS HIGHLIGHTS Significant items affecting the Summary of Operations and Changes in Net Assets for 2011 and 2010 are I as follows: • Operating revenues have remained steady in recent years despite the downturn in the overall economy. Revenues from aircraft storage and hangar rentals have assisted in offsetting the decrease in revenue derived from the delivery and sale of aviation fuel at the Airport. On a positive note, airfield revenue during 2010 and 2011 are trending upward after decrease in corporate and general aviation flying due to the economy and harsh winter weather in 2009,which resulted in a 31% decrease in itinerant general aviation operations over 2008. Fortunately, military traffic has remained strong during the recession providing the demand to keep the operations and fuel sales from further downward pressure. Building and land revenue has increased by nearly 70%in the past seven years. I • The Authority has been able to decrease operating expenses for two straight years by reducing costs 4% over 2010 and by 3% over 2009. This was following a 12.3% increase from 2007 to 2008. o During 2010 and 2011, the Authority made a concerted effort to hold and reduce operating costs by reducing travel and meeting expense as well as reducing all dues and subscriptions and cancelling all non-essential items. o In addition, the Authority was able to reduce building maintenance expense in recent years by over 60% by utilizing in-house personnel for items that were previously contracted out to third party vendors. • Depreciation expense increased due to new construction moving over $10 million from construction in progress to an asset in service and very capital intensive years from 2007-2010. • Capital contributions during 2011 were $443,000 for the design of a new aircraft rescue and fire fighting facility and the addition of an airfield navigational aid(precision approach path indicator, or PAPI). Nearly$5 million was received during 2009 and 2010 as a result of contributions from seven grants from the Federal Aviation Administration Airport Improvement (AIP) program and two new grants from the Kansas Department of Transportation. During 2009 and 2010 these grants funded the Authority's construction of a significant portion of a multi-year taxiway rehabilitation project and a mill and inlay project on the Airport's primary runway. • Ad-valorem tax revenue (mill levy) received by the Authority as a local taxing entity increased by 2% from 2010 to 2011 and by 33% from 2009 to 2010. Interest received on investments remained flat in 2011 following a decrease of$64,365 from 2009 to 2010 which was due to a reduction in bond proceeds on deposit as well as a decrease in investment interest rates. i 16 I I FINANCIAL FY 2011 FINANCIAL POSITION SUMMARY I The changes in net assets may serve over time as a useful indicator of a government's financial position. The Authority's assets exceeded liabilities by$26,830,897 at the close of 2011. A condensed summary of the Authority's total net assets at December 31 is shown below. I By far the largest portion of the Authority's net assets (82%) reflects its investment in capital assets I including land, buildings, airfield infrastructure and machinery and equipment, less any related debt used to acquire those assets that is still outstanding. The Authority uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Authority's I investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. I 2011 2010 2009 I ASSETS Current and other assets $ 7,261,149 $ 6,412,368 $ 4,524,282 Capital assets 48,263,889 48,593,008 47,774,283 ITotal assets 55,525,038 55,005,376 52,298,565 I LIABILITIES Long-term debt outstanding 25,025,548 23,775,192 13,260,869 Other liabilities 3,668,593 3,439,957 10,972,389 ITotal liabilities 28,694,141 27,215,149 24,233,258 NET ASSETS: I Invested in capital assets, 22,084,333 23,717,291 26,410,681 net of related debt I Restricted - - - Unrestricted 4,746,564 4,072,936 1,654,626 ITOTAL NET ASSETS $ 26,830,897 $ 27,790,227 $ 28,065,307 I I I 17 I I FINANCIAL F1-_()i 1 REVENUES II The following chart shows the major sources and the percentage of total operating revenues for the year I ended December 31,2011: I IN Airfield 1 Building and land rent I Other revenue I I A summary of revenues for the past three years is shown below. Total revenue increased by 1% or I $48,136 from 2010 to 2011 and increased 16.7% increase from 2009 to 2010. The increase in airfield revenue is a result of increased short term leasing activity and increased military hangar leasing activity I for forward operating location training. I 2011 2010 2009 I Operating Revenue: Airfield $781,290 $845,813 $667,636 Building and land rent 1,491,710 1,497,330 1,402,230 Other revenue 33,965 48,206 28,710 Total Operating 2,306,965 2,391,349 2,098,576 Non-Operating Income: Mill Levy 1,795,660 1,768,154 1,327,647 I Interest Income 9,856 9,948 74,313 Gain(loss) on sale of assets 19,039 -86,067 0 Total Non-Operating _ 1,824,555 1,692,035 1,401,960 1 TOTAL REVENUE $4,131,520 $4,083,384 $3,500,536 I 18 I 1 FINANCIAL FY 2011 1 EXPENSES The following chart shows the major expense categories and the percentage of total operating expenses for the year ended December 31,2011: I •I ■Administrative •Maintenance A summary of expenses for the past three years is shown below. Total expenses decreased 3%from 2010 to 2011 and were also within 1% from 2009 to 2010. The Authority has taken significant steps to hold operating ex p enses in recent years including completing more facili ty maintenance projects in-house and reducing administrative expenses such as travel and meetings. I ' 2011 2010 2009 Operating Expenses Administrative $ 1,385,079 $ 1,414,922 $ 1,352,357 Maintenance 771,450 821,798 867,771 Total Operating 2,156,529 2,236,720 2,220,128 Non-Operating Expense Interest Expense 954,990 964,069 987,379 Amortization of bond costs 28,992 39,929 26,750 Total Non-Operating 983,982 1,003,998 1,014,129 TOTAL EXPENSES $ 3,140,511 $ 3,240,718 $ 3,234,257 I 1 19 I I IN \\,\( 1 \1, I ' mil I CAPITAL ACQUISITIONS AND CONSTRUCTION ACTIVITIES Q CTI ITIES The Authority acquired $2,078,448 of capital assets during 2011. Significant items included the design and partial construction of a new Aircraft Rescue and Fire Fighting (ARFF) station. The construction of this project is expected to be completed in 2012 and will be funded primarily through Federal Aviation Administration Airport Improvement Program Grant funds. In addition, 2011 marked the beginning of renovations to several Authority buildings and hangars that were vacated by HBC in the first quarter of the year. Additional information can be found in Note I (C) in the notes to the financial statements. Capital asset acquisitions exceeding $1,000 are capitalized at cost and are depreciated over their useful lives, with the exception of land. The Authority's capital assets are financed using Federal and State grants with matching Authority funds, debt issuance and Authority revenues. Additional information on the Authority's capital assets can be found in Note III (C) in the notes to the financial statements and within the Supplemental Section of this report. DEBT ADMINISTRATION The outstanding long-term debt of the Authority was $25,025,548 at December 31, 2011. This debt consists of general obligation bonds, a financing lease and City of Salina special assessments. Maturities range from 2010 through 2031. Both principal and interest are payable from the general revenues of the Authority and mill levy revenue. During 2011, the Authority issued $14,325,000 in General Obligation Bonds which included moving $11,675,000 in temporary notes, to permanent financing. Details of the Authority's debt can be found in Note III (D)in the notes to the financial statements. I REQUEST FOR INFORMATION I This Management Discussion and Analysis is designed to provide detailed information on the Authority's operations and the financial results of those operations to all those with an interest in the Authority's financial affairs. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Manager of Administration and Finance by e-mail: shellis(csalair.ora or in writing to. Salina Airport Authority, 3237 Arnold Ave., Salina,KS 67401. 1 Respectfully submitted. /s, Timothy F. gers A.E. Michelle R. Swanson,C.M. Executive Director Manager of Administration and Finance I 1 20 1 i 1 1 1 1 1 I 1 (THIS PAGE INTENTIONALLY LEFT BLANK) I I I I I 1 I 1 21 i I FINANCIAL FY2011 I SALINA AIRPORT AUTHORITY STATEMENTS OF NET ASSETS I ASSETS December 31 I 2011 2010 CURRENT ASSETS Cash $ 5,308,083 $ 4,218,016 1 Accounts receivable 106,659 210,224 Prepaid expenses 945 17,909 Inventory-Avgas 1,722 2,251 Taxes receivable 1,638,423 1,833,239 Total Current Assets 7,055,832 6,281,639 1 LONG-TERM ASSETS I Capital Assets Land 10,818,059 10,449,502 1 Buildings, improvements and equipment, net of depreciation 35,875,640 36,938,127 Construction in progress 1,570,190 1,205,379 III Total Capital Assets 48,263,889 48,593,008 Other Long-Term Assets Bond issue costs, less accumulated amortization of$356,589 and $327,597 respectively 205,317 130,729 Total Noncurrent Assets 48,469,206 48,723,737 I TOTAL ASSETS $ 55,525,038 $ 55,005,376 1 I (continued) I See notes to financial statements. I 1 22 I FINANCIAL FY2011 I SALINA AIRPORT AUTHORITY I STATEMENTS OF NET ASSETS (continued) I LIABILITIES AND NET ASSETS December 31 2011 2010 CURRENT LIABILITIES: IAccounts payable-operations $ 32,351 $ 40,502 Accounts payable-capital purchases 188,351 85,815 I Accrued payroll and expenses 66,194 59,047 Accrued property tax 89,978 78,646 Accrued special assessments 12,971 12,506 I Sales tax payable 337 358 1 Deferred tax revenue 1,638,423 1,833,239 Unearned rental income 81,814 25,597 I Accrued interest 404,167 203,723 Current maturities of long-term debt 1,154,007 1,100,524 ITotal Current Liabilities 3,668,593 3,439,957 LONG-TERM LIABILITIES Bonds and note payable, less current maturities 25,025,548 23,775,192 ITotal Liabilities 28,694,141 27,215,149 NET ASSETS I Invested in capital assets, net of related debt 22,084,333 23,717,291 Unrestricted 4,746,564 4,072,936 ITotal Net Assets 26,830,897 27,790,227 TOTAL LIABILITIES AND NET ASSETS $ 55,525,038 $ 55,005,376 I I 1 See notes to financial statements. I I 1 23 I I FINANCIAL FY 2011 SALINA AIRPORT AUTHORITY I STATEMENTS OF REVENUES,EXPENSES AND CHANGES IN NET ASSETS j January 1 to December 31 2011 2010 OPERATING REVENUES I Airfield $ 781,290 $ 845,813 Building and land rent 1,491,710 1,497,330 Other revenue 33,965 48,206 1 Total Operating Revenues 2,306,965 2,391,349 OPERATING EXPENSES Administrative 1,385,079 1,414,922 Maintenance 771,450 821,798 Total Operating Expenses 2,156,529 2,236,720 1 OPERATING INCOME BEFORE DEPRECIATION 150,436 154,629 DEPRECIATION 2,407,566 2,290,253 1 OPERATING LOSS (2,257,130) (2,135,624) I NON-OPERATING INCOME AND(EXPENSES) Mill levy 1,795,660 1,768,154 I Interest on investments and financing lease 9,856 9,948 Interest expense (983,982) (1,003,998) 1 Gain(loss) on sale of assets 19,039 (86,067) Total Non-Operating Income and(Expenses) 840,573 688,037 1 LOSS BEFORE CAPITAL CONTRIBUTIONS (1,416,557) (1,447,587) CAPITAL CONTRIBUTIONS 457,227 1,172,507 I NET ASSETS 1 Increase(decrease)in Net Assets (959,330) (275,080) TOTAL NET ASSETS,beginning of year 27,790,227 28,065,307 1 TOTAL NET ASSETS, end of year $ 26,830,897 $ 27,790,227 See notes to financial statements. , : 24 I FINANCIAL FY 2011 I SALINA AIRPORT AUTHORITY I STATEMENTS OF CASH FLOWS (DIRECT METHOD) I January 1 to December 31 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from providing services $ 2,466,747 $ 2,374,283 ICash paid to employees for services (812,393) (825,454) Cash paid to suppliers for goods and services (1,315,871) (1,136,760) INet Cash Provided in Operating Activities 338,483 412,069 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES I Acquisition and construction of property,plant and equipment (1,962,366) (3,471,985) Proceeds from capital grants 443,681 1,077,310 Proceeds from property tax 1,795,660 1,768,154 I Proceeds (expenses) from sale of capital assets 19,039 (86,067) Principal payments on debt (12,756,306) (8,162,886) Proceeds of new borrowing 14,060,137 11,675,000 I Principal received on financing lease - 144,485 Bond issue costs paid (103,580) (39,535) Interest paid on long-term debt (754,537) (1,145,591) Net Cash Provided in Capital and Related Financing Activities 741,728 1,758,885 ICASH FLOWS FROM INVESTING ACTIVITIES Interest received on deposits 9,856 9,948 INCREASE IN CASH 1 090 067 2 180 902 INC , 1 CASH BALANCE-January 1 4,218,016 2,037,114 ICASH BALANCE-December 31 $ 5,308,083 $ 4,218,016 I The Authority received capital equipment having a fair value of$95,197 in 2010 and$13,546 in 2011 This non-cash transaction is included in CAPITAL CONTRIBUTIONS on the STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS and in Equipment acquisitions in Note C but it is not Iincluded in this STATEMENT OF CASH FLOWS. I (continued) See notes to financial statements. I 1 25 I FINANCIAL FY 2011 I SALINA AIRPORT AUTHORITY STATEMENTS OF CASH FLOWS (DIRECT METHOD) (continued) RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES January 1 to December 31 2011 2010 OPERATING LOSS $(2,257,130) $ (2,135,624) ADJUSTMENTS RECONCILING OPERATING LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation 2,407,566 2,290,253 Basis of assets sold - 279,023 1 CHANGES IN ASSETS AND LIABILITIES: Decrease (Increase) in accounts receivable 103,565 (17,066) 1 Decrease(increase) in prepaid expense 16,964 (16,891) Decrease (Increase) in inventory 529 (220) (Decrease)in accounts payable-operations (8,151) (6,264) , Increase in accrued payroll expenses 7,147 999 Increase in accrued property tax and special assessments 11,776 19,572 Increase (Decrease) in unearned rental income 56,217 (1,713) 1 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 338,483 $ 412,069 II I I I 1 See notes to financial statements. I , 26 F I FINANCIAL FY 2011 I Salina Airport Authority tY INOTES TO FINANCIAL STATEMENTS December 31,2011 I I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity I The Salina Airport Authority was established by the City of Salina, pursuant to Chapter 27, Article 3, of the Kansas Statutes Annotated for the purpose of acquiring surplus federal government property, specifically the former Schilling Air Force Base, located near the City of Salina. The Authority operates, I maintains, and develops the Salina Municipal Airport and the Salina Airport Industrial Center. The Authority is controlled by a five-member Board of Directors appointed by the Salina City Commission and, in accordance with Governmental Accounting Standards Board (GASB) Statement No. 14, the I Authority is considered to be a component unit of the City of Salina. The Authority is discreetly presented in the City's comprehensive annual financial reports. IB. Measurement Focus,Basis of Accounting and Basis of Presentation The Authority consists of an enterprise fund. Enterprise funds are classified as proprietary funds by the I GASB and are accounted for using a total economic resource measurement focus. The enterprise fund is used to account for operations that are financed and operated in a manner similar to private business enterprises. The intent of the Authority is that the costs of providing services on a continuing basis be I recovered through user fees and rents. The financial statements are prepared on the accrual basis of accounting. Under the accrual basis, revenues are recognized as earned and expenses as incurred. It is the Authority's policy to follow all Financial Accounting Standards Board(FASB) standards issued after I November 30, 1989, for its proprietary activities unless those new FASB pronouncements conflict with GASB guidance. I Revenues from airlines, fuel flowage fees, building and land rents, and rental car commissions are reported as operating revenues. Transactions, which are capital, financing or investing related, and the sale of assets, related to economic development, are reported as non-operating revenues. All expenses related to operating the Airport and Industrial Center are reported as operating expenses. Interest Iexpense and financing costs are reported as non-operating expenses. C. Assets,Liabilities and Equity I1. Cash and Investments I The Authority's cash and cash equivalents are considered to be cash on hand, demand deposits and short- term investments with original maturities of three months or less from date of acquisition. The Authority held no investments during these years. 1 1 1 27 FINANCIAL FY 2011 2. Receivables I Accounts Receivable. The Authority records revenues when services are provided. All receivables are I shown net of an allowance for uncollectibles. Property taxes receivable. The determination of assessed valuations and the collections of property I taxes for all political subdivisions in the State of Kansas is the responsibility of the various counties. The office of the County Appraiser annually determines assessed valuations and the County Clerk spreads the annual assessment on the tax rolls. The County Treasurer is the tax collection agent for all taxing entities within the county. In accordance with state statutes, property taxes are levied November 1 of the current year and are a revenue source to be used to finance the budget of the ensuing year. One-half of the property taxes are due December 20, prior to the fiscal year for which they are budgeted, and the second I half is due the following May 10. Collection of current year property tax by the County Treasurer is not completed, apportioned nor 1 distributed to the various subdivisions until the succeeding year, such procedure being in conformity with governing state statutes. Consequently, current year property taxes receivable are not available as a resource that can be used to finance the current year operations of the Authority. It is the Authority's I practice to record uncollected current year property tax as an account receivable and to record the same amount as deferred revenue. It is not practicable to apportion delinquent taxes held by the County Treasurer and, further, the amounts thereof are not material in relationship to the financial statements I taken as a whole. 3. Inventories I The Authority maintains no significant inventory of office and maintenance supplies. These items are expensed as purchased and no inventory is recorded in these financial statements. The Authority uses the I consumption approach in valuing inventories of Avgas sold for retail. That is, the purchase is recorded as an asset on the cost basis and the expenditure is deferred until the inventory is consumed under the weighted average cost method. 4. Prepaid items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as I prepaid items. I I I I I 28 1 IFINANCIAL FY 2011 5. Capital Contributions and Net Assets I Airport Improvement Program - Certain expenditures for airport capital improvements are significantly funded through the Federal Aviation Administration's Airport Improvement Program(AIP), with certain matching funds of the Authority. Capital funding provided under the AIP grant program is I considered earned as the related allowable expenditures are incurred. Grants received under the AIP program are reported in the Statement of Revenues, Expenses and Changes in Net Assets, as non- operating revenues and expenses as capital contributions. IDefense Reutilization Marketing Office Program - The Authority is a participant in the Defense Reutilization Marketing Office (DRMO) program. The DRMO entity disposes of United States military I surplus property. The property is first offered for reutilization with the Department of Defense, transferred to other federal agencies or donated to state and local governments. I The Authority's policy is to record fixed assets having a cost (or by implication fair value) in excess of $1,000 at acquisition. The Authority's capitalization policy with respect to fixed assets is to expense fixed assets costing$1,000 or less. Freight or other expenses necessary to put the asset into service equal Ito or greater than$1,000, are capitalized. The Authority records donated assets having an original cost of$5,000 or less at $1 in order to meet the I tracking requirement and will memo in the asset file the original cost because the Authority believes the fair value of these is less than$1,000 each. I The Authority estimates the donated items to have a value equal to 20% of cost. Items having an original cost of less than $5,000 will be valued at $1 with memo of original cost. Items having an original cost of more than $5,000 will be valued at 20% of original cost rounded to the nearest $1,000 with a memo to Ithe file of the original cost. If the Authority receives reliable written information indicating this procedure has produced a value Isignificantly different from fair value, an adjustment to that value will be made. Donated DRMO property with a value in excess of$1,000 is reported in the Statement of Revenues, IExpenses and Changes in Net Assets, as non-operating revenues and expenses as capital contributions. The Federal Aviation Administration, as the oversight agency, requires that the Airport track all the contributed property and the property must be held for at least one year prior to disposition. I 6. Capital Assets ICapital assets purchased or constructed are recorded at cost. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend assets' lives are not included in capital I assets cost. Capital assets donated to the Authority are recorded at their estimated fair value at the date of donation. Donated assets include property and equipment transferred to the Authority from the United States of America, September 9, 1966 and recorded at fair value at that date. The Authority maintains a 1 capitalization threshold of$1,000. I 1 29 FINANCIAL F C Y2011 Capital assets are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings 5—50 Equipment 5— 10 Vehicles 7— 10 1 Airfield 10—30 7. Compensated Absences I Substantially all full-time employees receive compensation for vacations, holidays, illness and certain other qualifying absences. The number of days compensated for various categories of absence is I generally based on length of service. Liabilities relating to these absences are recognized as incurred and included in accrued expenses. Per the Authority's compensation policy, the paid time off is not able to accrue beyond a one year period, therefore all such liabilities are recorded as current. The amount 1 accrued for such liabilities at December 31, 2011 and 2010 was $63,760 and$56,023 respectively. Balance Balance January 1, December 31, 2011 Increase Decrease 2011 $ 56,023 $ 7,737 $ - $ 63,760 Balance Balance ' January 1, December 31, 2010 Increase Decrease 2010 $ 53,778 $ 2,245 $ - $ 56,023 I II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Cash-Basis Law (KSA 10-1113) The Authority was in compliance with this law at all times during the year. I B. Depository Security(KSA 9-1402) 1 The Authority's funds were adequately secured at all times during the year. I I I 30 I FINANCIAL FY 2011 I III. DETAILED NOTES IA. Deposits IAs of December 31, 2011 and 2010,the Authority had cash and cash equivalents as listed below: December 31, 1 2011 2010 Cash Balances I Cash $ 5,308,083 $ 4,218,016 Less undeposited and petty cash (21,565) (7,454) Add uncleared checks 5,949 106,435 I Bank Balance 5,292,467 4,316,997 ILess FDIC Coverage 500,000 500,000 IBalances Securable by Collateral $ 4,792,467 $ 3,816,997 Security Provided by Depositories $ 19,670,378 $ 5,975,084 I The Authority did not have any activity in investment-type assets. 1 The Authority's policies relating to deposits and investments are governed by various Kansas Statutes (KSA). Those statutes specify the type of deposits and investments as well as the securing of those Ideposits and investments. Interest rate risk — In accordance with Kansas Statute 12-1675, The Authority manages its exposure to Iinterest rate fluctuations by limiting all time investments to maturities of less than two years. Credit risk— State law limits the amount of credit risk by restricting governments to specific investment types as listed in KSA 12-1675. The Authority's policy is to place idle funds in certificates of deposit, IUnited States obligations, and the Kansas Municipal Investment Pool (KMIP). The KMIP was rated AAAf/S 1+ by Standard & Poor's as of the date of this report. The KMIP is permitted to invest in fully collateralized certificates of deposit, certain obligations of the United States, certain repurchase/reverse I repurchase agreements, and other types of investments. Maturity information released by the KMIP showed that the investment pool consisted of investment with a maturity date of 365 days or less. I Custodial credit risk—The Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for I investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. Kansas Statutes 9-1402 and 9-1405 require that governments obtain security for all Ideposits. The Authority manages its custodial credit risk by requiring the financial institutions to grant a I31 FINANCIAL FY 2011 security interest in securities held by third-party custodial banks. Monies in the Kansas Municipal Investment Pool are not required to have pledged securities. Concentration of credit risk — This is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The Authority manages this risk by placing funds with financial institutions only after contacting all eligible institutions in the taxing area and monies in the Kansas II Municipal Investment Pool are diverse according to the policies of the investment pool. B. Receivables I Receivables as of year-end, including the applicable allowance for uncollectible accounts, are as follows: December 31, 2011 2010 Receivables Accounts $ 107,643 $ 211,208 Less: allowance for uncollectibles (984) (984) I 106,659 210,224 Taxes 1,638,423 1,833,239 Totals $ 1,745,082 $ 2,043,463 I 1 I I I Ii I I 32 I FINANCIAL FY 2011 IC. Capital Assets IThe following is a summary of the changes in capital assets during the current and preceding year: Balance Balance 1 January 1, December 31, 2011 Additions Dispositions Reclassify 2011 Capital Assets INon-Depreciable Land $ 10,449,502 $ 368,557 $ - $ - $ 10,818,059 IConstruction in progress 1,205,379 1,349,037 - (984,226) 1,570,190 Total Non-Depreciable 11,654,881 1,717,594 - (984,226) 12,388,249 IDepreciable Buildings and improvements 22,368,837 112,417 - - 22,481,252 Airfield and improvements 35,070,665 195,933 - 984,227 36,250,825 Equipment 3,664,439 52,504 3,716,943 I Total Depreciable 61,103,941 360,854 - 984,227 62,449,020 Total Non-Depreciable& Depreciable $ 72,758,822 $ 2,078,448 $ - $ - $ 74,837,269 IAccumulated depreciation Buildings and improvements $ (6,487,737) $ (892,831) $ - $ - $ (7,380,568) IAirfield and improvements (15,485,968) (1,250,187) - - (16,736,155) Equipment (2,192,109) (264,548) - - (2,456,657) ITotal Accumulated Depreciation (24,165,814) (2,407,566) - - (26,573,380) IITotal Capital Assets $ 48,593,008 $ (329,118) $ - $ - $ 48,263,889 I I I I I I33 1 FINANCIAL FY 2011 I Balance Balance January 1, December 31, 2010 Additions Dispositions Reclassify 2010 Capital Assets Non-Depreciable Land $ 10,045,937 $ 466,789 $ (144,289) $ 81,065 $ 10,449,502 Construction in progress 11,225,092 355,919 - (10,375,632) 1,205,379 I Total Non-Depreciable 21,271,029 822,708 (144,289) (10,294,567) 11,654,881 Depreciable I Buildings and improvements 15,444,301 579,662 - 6,344,874 22,368,837 Airfield and improvements 29,537,578 1,584,946 - $ 3,948,141 35,070,665 Equipment 3,407,089 266,159 (10,360) 1,551 3,664,439 1 Total Depreciable 48,388,968 2,430,767 (10,360) 10,294,566 61,103,941 Total Non-Depreciable& Depreciable $ 69,659,997 $ 3,253,475 $ (154,649) $ - $ 72,758,822 Accumulated depreciation I Buildings and improvements $ (5,624,644) $ (863,093) $ - $ - $ (6,487,737) Airfield and improvements (14,316,331) (1,169,637) - - (15,485,968) Equipment (1,944,739) (257,523) 10,153 - (2,192,109) I 1 Total Accumulated Depreciation (21,885,714) (2,290,253) 10,153 - (24,165,814) 1 Total Capital Assets $ 47,774,283 $ 963,222 $ (144,496) $ - $ 48,593,008 - 1 1 I I I I 1 34 I I FINANCIAL FY 2011 ID. Long-Term Liabilities IFollowing is a summary of changes in long-term liabilities during the current and preceding years: ICurrent Balance Balance Maturities 1 January 1, December 31, December 31, 2011 Additions Reductions 2011 2011 I Long-term Liabilities General obligation bonds $12,792,154 $14,056,831 $ 1,040,000 $ 25,808,985 $ 1,090,000 Financing Lease payable 285,796 - 40,238 245,558 42,941 - I Special assessment debt 145,299 20,287 125,012 21,066 General obligation temporary notes 11,652,467 - 11,652,467 - ITotal Long-Term Liabilities $24,875,716 $14,056,831 $ 12,752,992 $ 26,179,555 $ 1,154,007 Current Maturities (1,100,524) (1,154,007) Long Term Liability Net $23,775,192 $ 25,025,548 I Current I Balance Balance Maturities January 1, December 31, December 31, 2010 Additions Reductions 2010 2010 I Long-term Liabilities General obligation bonds $13,782,154 $ $ 990,000 $ 12,792,154 $ 1,040,000 Financing Lease payable 323,500 - 37,704 285,796 40,238 ISpecial assessment debt 207,948 - 62,649 145,299 20,286 General obligation I temporary notes 7,050,000 11,652,467 7,050,000 11,652,467 - Total Long-Term Liabilities $21,363,602 $11,652,467 $ 8,140,353 $ 24,875,716 $ 1,100,524 Current Maturities (8,102,733) (1,100,524) ILong Term Liability Net $13,260,869 $ 23,775,192 I 1 I 1 35 FINANCIAL FY 2011 The following is a detailed listing of the Authority's long-term debt including general obligation bonds, financing lease and special assessment debt at December 31, 2011: 1 Original Issue Interest Rates Bonds Outstanding General Obligation Bonds General Obligation 2001-A,due 2012 1,385,000 4.45% to 5.60% 175,000 General Obligation 2002-A,due 2012 2,635,000 2.45% to 3.70% 305,000 General Obligation 2005-A,due 2020 3,635,000 4.75% to 5.25% 2,935,000 General Obligation 2007-A,due 2022 1,005,000 4.60% to 6.00% 800,000 General Obligation 2009-A,due 2029 2,025,000 4.31% 1,932,154 General Obligation 2009-B,due 2026 6,080,000 3.00% to 5.50% 5,605,000 General Obligation 2011-A,due 2030 11,820,000 4.64% 11,603,309 General Obligation 2011-B,due 2031 2,505,000 4.28% 2,453,522 1 Total General Obligation Debt 25,808,985 I Financing Lease, due December 2016 425,000 6.609% 245,558 Special Assessment Debt 1 Airport Industrial Center,due 2016 565,235 3.79% 104,691 Hangar 600 Sanitary Sewer,due 2021 27,599 4.47% 20,321 1 Total Special Assessment Debt 125,012 Total Long Term Debt $ 26,179,555 1 Interest Expense in 2010 is as follows: General Obligation Bonds 592,272 Special Assessment Debt 5,656 Financing Lease 18,234 1 Temporary Notes 338,828 954,990 I Add: Amortization of bond costs 28,992 Total Debt Interest Expense $ 983,982 j I I I 36 1 f FINANCIAL FY 2011 1 Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies and Irental revenues: Bonds 1 Year Outstanding Interest Due Total 2012 1,090,000 1,169,829 2,259,829 2013 895,000 1,096,914 1,991,914 2014 925,000 1,067,866 1,992,866 2015 955,000 1,036,264 1,991,264 I 5,600,000 2016 990,000 1,001,531 1,991,531 2017-2021 4,370,941 9,970,941 2022-2026 6,965,000 3,006,746 9,971,746 I2027-2031 8,750,000 1,218,234 9,968,234 $ 26,170,000 $ 13,968,325 $ 40,138,325 I Annual debt service requirements for Financing Lease payable rental revenues: 111 Year Principal Due Interest Due Total 2012 42,941 15,531 58,472 I 2013 45,826 12,646 58,472 2014 48,905 9,567 58,472 2015 52,190 6,282 58,472 1 2016 55,696 2,776 58,472 $ 245,558 $ 46,802 $ 292,360 I Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental revenue: I I Year Loan Principal Interest Due Total 2012 21,066 4,876 25,942 2013 21,876 4,067 25,943 I 2014 22,717 3,226 25,943 2015 23,590 2,352 25,942 2016 24,497 1,446 25,943 1 2017-2021 11,268 1,555 12,823 $ 125,014 $ 17,522 $ 142,536 I I 1 37 L FY2 11 FINANCIAL o I E. Capital Contributions and Net Assets I Since its inception, the Authority has received capital contributions through Federal and State grants as follows: I Inception to Date 2011 2010 1 Federal $26,953,281 $365,328 $ 710,275 State 1,593,963 78,353 371,615 1 Total $28,547,244 $ 443,681 $1,081,890 I The Authority has designated$90,000 to be used as an insurance increase reserve or to accelerate future debt service payments. As of December 31, 2011, the reserve had been funded but not used. I IV. OTHER INFORMATION A. Defined Benefit Pension Plan Plan description — The Authority participates in the Kansas Public Employees Retirement System I (KPERS). The plan is a cost-sharing multiple-employer defined benefit pension plan as provided by Kansas statutes (KSA 74-4901 et seq). KPERS provides retirement benefits, life insurance, disability income benefits and death benefits. Kansas law establishes and amends benefit provisions. KPERS issues a publicly available financial report that includes financial statements and required supplementary information. Those reports may be obtained by writing to KPERS (611 S. Kansas Avenue, Suite 100, Topeka, Kansas 66603-3803) or by calling 1 (888)275-5737 Funding policy — KSA 74-4919 establishes the KPERS member-employee contribution rate at 4% for Tier 1 and 6% for Tier 2 employees of covered salary. The employer collects and remits member- employee contributions according to the provisions of section 414(h) of the Internal Revenue Code. State law provides that the employer contribution rates be determined annually based on the results of an annual actuarial valuation. KPERS is funded on an actuarial reserve basis. State law sets a limitation on annual increases in the employer contribution rates. The KPERS employer rate established for calendar year 2011 was 7.74%. The Authority employer contributions to KPERS for the years ending December 31, 2011, 2010 and 2009 were $60,885, $65,284 and $52,641 respectively, equal to the required contributions for each year. I 38 1 FINANCIAL FY 2011 1 B. Deferred Compensation Plan ' The Authority offers its employees a deferred compensation plan ("Plan") created in accordance with Internal Revenue Code Section 457. The Plan, available to all Authority employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Plan assets are transferred to a plan agent in a custodial trust and are not available to the claims of the Authority's general creditors. ' C. Flexible Benefit Plan(I.R.C. Section 125) The Authority has adopted by resolution a salary-reduction flexible benefit plan ("Plan") under Section 125 of the Internal Revenue Code. All Authority employees working more than 20 hours per week are eligible to participate in the Plan beginning after thirty days of employment. Each participant may elect ' to reduce his or her salary to purchase benefits offered through the Plan. Benefits offered through the Plan include various insurance and disability benefits. D. Risk Management The Authority is exposed to various levels of loss related to torts; theft of, damage to, and destruction of ' assets; errors and omissions; injuries to employees; and natural disasters. There has been no significant reduction in the Authority's insurance coverage from the previous year. In ' addition, there have not been settlements in excess of the Authority's coverage in any of the prior three years. E. Contingent Liabilities The Authority receives significant financial assistance from numerous federal and state governmental agencies in the form of grants and state pass-through aid. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and are subject to audit. Any disallowed claims resulting from such audits could become a liability of the Authority. However, in the opinion of management, any such disallowed claims would not have a material effect on any of the financial statements of the Authority at December 31,2011. F. Other postemployment benefits(OPEB) ' As a component unit of the City of Salina, the Authority participates in the City's defined benefit healthcare plan that is administered by the City. The Employee Benefit Plan(the Plan) provides medical and dental benefits to eligible early retirees and their spouses. KSA 12-5040 requires all local governmental entities in the state that provide a group health care plan to make participation available to all retirees and dependents until the retiree reaches the age of 65 years. No separate financial report is issued for the Plan. As a component unit of the primary government, the Authority is not required to make contributions to the plan. The OPEB cost, actuarial valuations of the ongoing p lan and net OPEB obligations for the Authority as a sub-group of the plan, are calculated and recorded in the City's CAFR. 1 39 FINANCIAL FY 2011 1 G. Environmental Matter The U.S. Depai talent of Defense transferred property located at the former Schilling Air Force Base to the Authority on or about September 9, 1966. The property is now known to contain areas of extensive soil and groundwater contamination, as a result of the use and disposal of chlorinated solvents during I military operations at the former base during its period of active military duty from 1942 to 1965. The U.S. Department of Defense is responsible for the investigation and remediation of contamination I caused by military activities at current and former military bases. The U.S. Army Corps of Engineers (USACE) is the lead agency for the Department at formerly used defense sites. The Corps has investigated the soil and groundwater contamination at the former base under the regulatory oversight of I the U.S. Environmental Protection Agency and the Kansas Department of Health and Environment. The former base is not designated as a National Priority List Superfund site, but investigation and remediation is required to be in compliance with the Comprehensive Environmental Response, I Compensation and Liability Act. Potential liability for contamination under the Act extends broadly to parties associated with the release I or presence of hazardous substances, including not only those entities involved with contaminant use and disposal, but in some cases other current and former owners and operators of contaminated sites. As a current owner of extensive amounts of property at the former base, the Authority is potentially liable I under the act although the Authority believes that it has defenses to such liability. Based on presently known information, the Authority has determined that while a possible liability I exists, it is not probable and at this time no reasonable estimate of the possible liability can be made. Therefore, no liability relating to that matter has been recorded. The Authority is under no administrative orders from the U.S. Environmental Protection Agency or the Kansas Department of Health and Environment. The Authority is considered to be a Potentially Responsible Party for the former base site, primarily due to its status as a property owner. The Salina Airport Authority, City of Salina, Unified School District No. 305 and the Kansas Board of Regents (Kansas State University at I Salina) collectively own over 90% of the nearly 4,000 acres of the former Schilling Air Force Base property. Beginning in August 2007, the four local public entities including the Salina Airport Authority, the City I of Salina, the Salina School District and Kansas State University at Salina initiated negotiations with the U.S. Federal Government. The negotiation objectives include transferring the responsibility for completing the cleanup from the USACE to the Salina Public Entities. The local objective is to reach a settlement agreement with the United States of America that provides the Salina Public Entities sufficient funds to complete cleanup operations over a 30-year period. During calendar year 2008, the Salina Public Entities prepared a detailed Cost to Complete Estimate (CTC). The CTC preparation included consultation with the EPA and KDHE. The Salina Public Entities' CTC was completed in June of 2008 and submitted to the USACE. Subsequently, on January 23, 2009, the Salina Public Entities delivered a demand letter to the USACE. The letter demands that settlement negotiations begin immediately with the U.S. Department of Justice. On May 14, 2009 the Authority was notified that the USACE referred the former SAFB demand letter to the U.S. Department of Justice on May 12, 2009. 40 I ' FINANCIAL FY 2011 The Salina Public Entities delivered on or about May 10, 2010, a settlement offer and a draft of a lawsuit complaint to the attorney for the U.S. Department of Justice. The Salina Public Entities planned to file suit against the U.S. if the matter was not settled by the end of May 2010. The Salina Public Entities do not intend to cut off settlement negotiations by the filing of suit, and this has been communicated to the U.S. No remedial action plan or record of decision has been adopted by EPA or KDHE. On or about May 27,2010, the Salina Public Entities filed their Complaint against the United States of America,the United States Department of Defense and Secretary of Defense,Robert M. Gates, in his official capacity(collectively, "Defendants"). On or about September 22, 2010,the Salina Public Entities filed their First Amended Complaint in four counts. On or about October 6, 2010, Defendants filed their motion to dismiss and to strike. On or about March 25, 2011,Judge Murguia entered his Memorandum and Order. The Judge granted the Defendants' motion to dismiss Counts I and II(citizen suit claims) for lack of subject matter jurisdiction. He also ' granted the Defendants' motion to dismiss the Salina Public Entities' request for attorney fees,with the exception of non-litigation attorney fees. He denied the Defendants' motion to strike the Salina Public Entities' allegations of a conflict of interest. The Salina Public Entities' claims under Counts II and IV for response costs under CERCLA 9607(a) are not affected by the Judge's rulings. The Salina Public Entities disagree with most of the Judge's rulings and plan to take an interlocutory appeal to the Tenth Circuit to contest the rulings. In the Stipulation by Plaintiffs and Defendants filed in U.S. District Court ' on June 17, 2011, the U.S., on behalf of the Corps, admitted that: "At some point or points between 1942 and 1965, during the time the United States owned or operated the Site,military personnel of the United States used, disposed of and caused the release of hazardous substances at the Site." This is a significant item for the Salina Public Entities as it is the first time since the U.S., on behalf of the Corps, began its investigation in 1991 that the federal government has provided such an admission. The Salina Public Entities and the U.S. Department of Justice on behalf of the U.S. Army Corps of ' Engineers are currently and actively involved in court-supervised,non-binding mediation. The mediation process should result in a consent decree providing for federal funds sufficient to enable the Salina Public Entities to initiate cleanup operations. I I I I t 1 41 FINANCIAL FY 2011 H. Rental Income Under Operating Leases P g A significant portion of the operating revenue of the Authority is generated through the leasing of I airport and building space to airport fixed base operators and others on a fixed fee as well as a contingent rental basis. Ownership risks are retained by the Authority, and accordingly, such leases are treated as operating leases. I The following is a schedule of minimum future rentals on non-cancellable operating leases to be received in each of the next five years and thereafter: I Years Ended December 31 2012 833,681 2013 789,418 2014 805,768 2015 746,540 2016 363,127 Later Years 997,318 Total $ 4,535,852 ' I. Major Customers i The Authority received significant operating revenue from the Kansas Military Board, Hawker Beechcraft Corporation, Learjet, Inc., CAV Aerospace, Flower Aviation, and America Jet. Rent from I these six tenants equals 64% of operating and capital lease revenue for the year ended December 31, 2011. I I I 1 i 42 i FINANCIAL FY 2011 I J. Non-Operating Income and (Expense) Net non-operating income and expense consisted of the following for the years ended December 31, 2011 and 2010: ' December 31, I 2011 2010 Mill levy $ 1,795,660 $ 1,768,154 Interest income 9,856 9,948 Gain(loss) on sale of assets 19,039 (86,067) Total $ 1,824,555 $ 1,692,035 1. Interest expense General obligation bonds $ (592,272) $ (674,525) Special assessment debt (5,656) (6,407) Financing lease (18,234) (19,937) Temporary notes (338,828) (263,200) Amortization of bond issue costs (28,992) (39,929) Total (983,982) (1,003,998) Net non-operating income $ 840,573 $ 688,037 I K. Commitment Under Operating Lease The Authority has entered into a certain non-cancellable operating lease agreement which will expire in 2013, for the rental of office equipment. During both 2010 and 2011, the Authority paid $11,400 in rentals. Minimum rentals, on an annual basis are as follows: Years Ended December 31 2012 11,400 2013 1,900 Total $ 13,300 L. Subsequent Events The Salina Airport Authority's management has evaluated events and transactions occurring after December 31,2011 through June 14, 2012. The aforementioned date represents the date the financial statements were available to be issued. 43 I I I 1 I (THIS PAGE INTENTIONALLY LEFT BLANK) I I I I I I I I 44 a I -* J Supplemental : ,__ ,,, . , , . , __.. , . Information ..„,...,.,..,._. ,._......._ .,: ,_ . ...._,.. . . .. ....,.. ..... ..,. . „,. . .,_ • ...._ ... .. , . :„. : , _ : . . 9 4 rT , ,. _ :,Y ;, ter. _ i - '�/ i •Y t 7 y ._ . . ,:„.; ._ . r.:.41 41, .., .BE '•4' lio a,: W e\C,el ryl gQii . 77' \ cls. ni q , . -14, - _ . ._. - . ..„. ._-...,:-..- -,,,, 1 , .,_. .--.„----.,„ ,. .. iie .., ....:.„;.,.,v 1 oh _..,,. : . . k..... ., , .., :.:y.o.i•.,_,..„ . ...**, orvir7. . „.„. . 7 '1. ' . Salina, Kan., (December 5, 2011) — Nearly 40o people were in attendance Saturday at Salina Airport's Hangar 600 to welcome Santa Claus at Candy Canes and Airplanes.Also in attendance was Mrs. Claus to help Santa hear all the local children's Christmas wishes and find out who was naughty or nice this year. I d "Never in my days have I had such a warm welcome like I did in Salina,"said Santa regarding his arrival that day. "The children of Salina hold a very special place in my heart and those in attendance definitely I made the `nice list'this year!" There were nearly a dozen aircraft displayed at Candy Canes and Airplanes including a Pilatus, Husky, Luscombe and Skyhawk but the prized gem was the vintage 1942 Stearman Santa used as his sleigh this year so the reindeer were well rested for Christmas Eve. Santa's sleigh was piloted by Capt. Elvin T. Elf, i one of his top helpers at the North Pole. As Santa and Elvin arrived, the children lined the hangar welcoming Santa, renewing the sense of Christmas spirit in the Salina community all over again. 1 SUPPLEMENTAL FY 2011 I SALINA AIRPORT AUTHORITY I SCHEDULES OF REVENUES,EXPENSES AND CHANGES IN NET ASSETS I January 1 to December 31 2011 2010 OPERATING REVENUES I Airfield Fuel flowage fees $ 167,569 $ 191,027 Hangar rent 542,858 564,443 I Landing fees 3,993 4,885 Ramp rent 66,870 85,458 Total Airfield 781,290 845,813 1 Agri land rent 59,061 56,337 IBuilding rents 1,182,337 1,187,135 Land rents 241,155 245,915 Tank rent 9,157 7,943 ITotal Building and Land Rents 1,491,710 1,497,330 I Other revenue ARFF training 6,390 Commissions 13,669 14,847 I Sale of avgas 18,992 22,121 Less cost of avgas (17,555) (21,171) Other income 18,859 26,019 ITotal Other Revenue 33,965 48,206 1 Total Operating Revenue $ 2,306,965 $ 2,391,349 I I I 1 (continued) I 1 45 I SUPPLEMENTAL FY 2011 I SALINA AIRPORT AUTHORITY SCHEDULES OF REVENUES,EXPENSES AND CHANGES I IN NET ASSETS January 1 to December 31 2011 2010 1 OPERATING EXPENSES Administrative A/E,consultants,brokers $ 45,439 $ 58,211 Airport promotion 31,327 56,933 Bad debt expense - 5,000 Computer network administration 14,536 17,641 Dues and subscriptions 33,998 29,012 Employee retirement 70,517 65,284 FICA and medicare 60,649 61,480 Industrial development 30,000 30,000 Insurance,property 118,156 139,853 Insurance,medical 203,698 210,982 Kansas unemployment tax 812 1,053 Legal and accounting 47,207 38,953 Office salaries 458,296 443,549 Office supplies 12,626 13,562 Other administrative 15,182 15,226 Postage 3,609 3,611 Property taxes 187,465 177,864 Special events 6,338 5,103 Telephone 17,922 19,979 Travel and meetings 27,302 21,626 Total Administrative Expenses $ 1,385,079 $ 1,414,922 1 I I I I I (continued) i I 46 1 I SUPPLEMENTAL FY 2011 I SALINA AIRPORT AUTHORITY I SCHEDULES OF REVENUES,EXPENSES AND CHANGES IN NET ASSETS (continued) I January 1 to December 31 2011 2010 MAINTENANCE EXPENSES 1 Airfield maintenance $ 23,553 $ 16,532 Airport security 320 (1,798) Building maintenance 33,904 53,637 I Equipment fuel and repairs 88,492 92,226 Fire services 1,593 28,079 Grounds maintenance 1,010 1,677 I Maintenance salaries 361,244 381,905 Other maintenance expenses 20,671 28,908 Snow removal expense 35,469 10,685 IUtilities 205,194 209,947 Total Maintenance Expenses 771,450 821,798 ITotal Operating Expenses 2,156,529 2,236,720 IOPERATING INCOME BEFORE DEPRECIATION 150,436 154,629 DEPRECIATION EXPENSE 2,407,566 2,290,253 IOPERATING LOSS (2,257,130) (2,135,624) I NON-OPERATING INCOME (EXPENSE) Mill levy 1,795,660 1,768,154 Interest income 9,856 9,948 I Interest expense (954,990) (964,069) Amortization of bond costs (28,992) (39,929) Gain(loss)on sale of assets 19,039 (86,067) ITotal Non-Operating Income (Expense) 840,573 688,037 ILOSS BEFORE CAPITAL CONTRIBUTION (1,416,557) (1,447,587) CAPITAL CONTRIBUTIONS 457,227 1,172,507 IDECREASE IN NET ASSETS (959,330) (275,080) INET ASSETS,January 1 27,790,227 28,065,307 NET ASSETS, December 31 $26,830,897 $27,790,227 I I 47 I SUPPLEMENTAL FY2011 SALINA AIRPORT AUTHORITY I CAPITAL EXPENDITURES January 1 to December 31 2011 AIRPORT IMPROVEMENTS Airport layout plan update $ 4,158 1 Ramp/driveway construction KS National Guard Army Aviation Support Facility 29,841 Airfield pavement rehabilitation 6,997 Aerial photograhy 8,444 Airfield perimeter fencing at Hangar 600 850 FBO general aviation terminal access improvements 7,766 North ramp redevelopment design 33,349 Runway 35 Precision approach path indicator 104,106 General aviation hangar design(phase I) 422 Total Airport Improvements 195,933 BUILDINGS I Hangar 409 improvements 18,588 Bldg. 820 improvements 14,426 Bldg. 824 improvements 4,020 Hangar 606 improvements 31,050 Bldg. 310 improvements 12,660 Bldg. 1105 roof replacement 9,052 Bldg. 700 improvements 7,851 Pumphouse fuel farm 305 improvements 12,070 Airport road facilities; water service line improvements 2,700 Total Buildings 112,417 EQUIPMENT I 2001 International 4700 aircraft rescue and fire fighting command vehicle 4,351 Aircraft rescue and firefighting turnout gear/equipment 1,630 Administrative office equipment 960 Administrative office furniture 4,473 Airfield and building delineator barricades 12,952 Snow removal equipment 2,894 Aircraft rescue and firefighting equipment 9,348 Mobile ramp 2,350 X-ray truck 5,000 Trailer 1,546 Stake truck 4,500 Fork lift truck 2,500 Total Equipment 52,504 I I 48 I I SUPPLEMENTAL FY2011 SALINA AIRPORT AUTHORITY CAPITAL EXPENDITURES ' (continued) January 1 to December 31 ICONSTRUCTION IN PROGRESS 2011 Aircraft rescue and fire fighting station $ 539,033.00 Terminal,public viewing area and museum 330,498 Bldg. 620 rehabilitation 13,314 Bldg. 824 rehabilitation 3,862 I Jumper road t-hangars 15,720 Hangar 606 rehabilitation 401,946 Hangar 959 rehabilitation 30,345 Pumphouse fuel farm 305 improvements 14,319 Total Construction in Progress 1,349,037 LAND Environmental 368,557 TOTAL CAPITAL EXPENDITURES $ 2,078,448 i I i i i I 1 i I 1 49 I SUPPLEMENTAL FY 2011 I SALINA AIRPORT AUTHORITY GENERAL OBLIGATION IMPROVEMENT BONDS SERIES 2001 - A December 31, 2011 Date of issue: October 31, 2001 Amount of issue: $ 1,385,000 Interest rate: 4.45%to 5.60% Maturity date: September 1, 2012 Principal paid: $ 1,210,000 Outstanding balance: $ 175,000 Schedule of Bond Interest and Principal Payments I Due in Bond Bond Year Interest Principal I 2012 9,800 175,000 $ 9,800 $ 175,000 I I l I I I I I 50 I i SUPPLEMENTAL FY 2011 I SALINA AIRPORT AUTHORITY GENERAL OBLIGATION IMPROVEMENT BONDS SERIES 2002 -A December 31, 2011 Date of issue: August 29, 2002 Amount of issue: $ 2,635,000 Interest rate: 2.45%to 3.70% Maturity date: September 1, 2012 Principal paid: $ 2,330,000 Outstanding balance: $ 305,000 Schedule of Bond Interest and Principal Payments Due in Bond Bond Year Interest Principal 2012 11,285 305,000 $ 11,285 $ 305,000 I I I i I i 1 I i 1 51 I SUPPLEMENTAL FY 2011 I SALINA AIRPORT AUTHORITY GENERAL OBLIGATION IMPROVEMENT BONDS SERIES 2005 -A December 31, 2011 Date of issue: August 1, 2005 Amount of issue: $ 3,635,000 4.75%to 5.25% Maturity date: September 1, 2020 Principal paid: $ 700,000 Outstanding balance: $2,935,000 Schedule of Bond Interest and Principal Payments Due in Bond Bond Year Interest Principal I 2012 147,926 260,000 2013 134,275 275,000 I 2014 119,838 290,000 2015 104,612 305,000 2016 88,600 320,000 2017-2020 190,150 1,485,000 $ 785,401 $ 2,935,000 1 I I I I I I 52 1 SUPPLEMENTAL FY 2011 I SALINA AIRPORT AUTHORITY GENERAL OBLIGATION IMPROVEMENT BONDS SERIES 2007-A December 31,2011 1 Date of issue: December 15, 2007 Amount of issue: $ 1,005,000 Interest rate: 4.6%to 6.0% Maturity date: September 1, 2022 Principal paid: $ 205,000 Outstanding balance: $ 800,000 Schedule of Bond Interest and Principal Payments Due in Bond Bond Year Interest Principal 2012 40,490 55,000 2013 37,603 55,000 2014 34,743 60,000 2015 31,983 65,000 2016 28,928 70,000 2017-2022 95,230 495,000 $268,977 $ 800,000 I i t 1 1 1 I 1 53 I SUPPLEMENTAL FY 2011 I SALINA AIRPORT AUTHORITY GENERAL OBLIGATION BONDS SERIES 2009-A December 31, 2011 Date of issue: June 1,2009 Amount of issue: $ 2,025,000 Interest rate: 4.31% Maturity date: September 1, 2029 Principal paid: $ - Outstanding balance: $ 2,025,000 1 Schedule of Bond Interest and Principal Payments Due in Bond Bond Year Interest Principal 2012 85,648 - 2013 85,648 - 2014 85,648 - 2015 85,648 - 2016 85,648 - 2016-2029 1,007,494 2,025,000 $ 1,435,733 $ 2,025,000 I I I I I I I 54 I SUPPLEMENTAL FY 2011 I SALINA AIRPORT AUTHORITY TAXABLE GENERAL OBLIGATION BONDS SERIES 2009-B December 31,2011 Date of issue: June 1,2009 Amount of issue: $ 6,080,000 Interest rate: 4.998% Maturity date: September 1, 2026 Principal paid: $ 475,000 Outstanding balance: $ 5,605,000 Schedule of Bond Interest and Principal Payments IDue in Bond Bond Year Interest Principal 2012 253,275 295,000 2013 244,425 305,000 2014 235,275 315,000 2015 225,038 325,000 2016 213,663 335,000 2017-2026 1,177,612 4,030,000 $ 2,349,288 $ 5,605,000 i I 1 I 1 I 1 55 I SUPPLEMENTAL FY 2011 I SALINA AIRPORT AUTHORITY TAXABLE GENERAL OBLIGATION Bonds SERIES 2011-A December 31, 2011 Date of issue: August 17, 2011 Amount of issue: $ 11,820,000 Interest rate: 4.64% Maturity date: September. 1,2030 Principal paid: $ - Outstanding balance: $ 11,820,000 j Schedule of Bond Interest and Principal Payments Due in Bond Bond Year Interest Principal 2012 513,483 - 2013 751,633 260,000 2014 489,032 260,000 2015 489,033 260,000 2016 481,362 265,000 2017-2030 4,336,422 10,775,000 $ 7,060,965 $ 11,820,000 I I I I I I I 56 I SUPPLEMENTAL FY 2011 I SALINA AIRPORT AUTHORITY GENERAL OBLIGATION Bonds SERIES 2011-B December 31,2011 Date of issue: August 17,2011 Amount of issue: $ 2,505,000 Interest rate: 4.280% Maturity date: September. 1,2031 Principal paid: $ - Outstanding balance: $ 2,505,000 Schedule of Bond Interest and Principal Payments Due in Bond Bond Year Interest Principal 2012 107,924 - 2013 103,331 - 2014 103,331 2015 103,331 - 2016 103,331 - 2017-2031 1,525,632 2,505,000 $ 2,046,880 $ 2,505,000 I I f 1 i I 57 I SUPPLEMENTAL FY 2011 I SALINA AIRPORT AUTHORITY SPECIAL ASSESSMENT DEBT-STREET AND UTILITY IMPROVEMENT Airport Industrial Center Subdivision December 31,2011 Date of loan: September 11, 2002 Amount of loan: $ 306,582 Interest rate: 3.79% Maturity date: October 1,2016 Principal paid: $ 201,891 Outstanding balance: $ 104,691 Schedule of Loan Interest and Principal Payments I Due in Loan Loan Year Interest Principal I 2012 3,968 19,410 2013 3,232 20,146 I 2014 2,469 20,909 2015 1,676 21,702 2016 854 22,524 $ 12,199 $ 104,691 I I 1 I I 1 I 58 I I SUPPLEMENTAL FY 2011 I SALINA AIRPORT AUTHORITY I SPECIAL ASSESSMENT DEBT-SANITARY SEWER EXTENSION HANGAR 600 December 31, 2011 IDate of loan: April 23, 2007 Amount of loan: $ 27,599 IInterest rate: 4.47% Maturity date: December 20, 2021 I Principal paid: $ 7,278 Outstanding balance: $ 20,321 ISchedule of Loan Interest and Principal Payments Due in Loan Loan 1 Year Interest Principal 2012 908 1,656 1 2013 834 1,730 2014 757 1,808 I 2015 676 1,888 2016 592 1,973 2017-2021 1,555 11,266 I $ 5,322 $ 20,321 I I I I I I I 1 59 1 SUPPLEMENTAL FY 2011 1 SALINA AIRPORT AUTHORITY FINANCING LEASE PAYABLE December 31, 2011 Date of loan: September 28, 2006 1 Amount of loan: $ 425,000 Interest rate: 6.609% Maturity date: September 1, 2016 Principal paid: $ 179,442 Outstanding balance: $ 245,558 Schedule of Loan Interest and Principal Payments Due in Loan Loan Year Interest Principal 2012 15,531 42,941 2013 12,646 45,826 2014 9,567 48,905 1 2015 6,282 52,190 2016 2,776 55,696 $ 46,802 $ 245,558 1 1 1 1 1 1 1 1 60 SUPPLEMENTAL FY 2011 IISALINA AIRPORT AUTHORITY INSURANCE IN FORCE I December 31,2011 Amount of Insurance Policy Type of Coverage Coverage IEmployers Insurance of Wausau Workmen's Compensation on behalf of USAIG and Employer's Liability $ 500,000 IPol.#WCK-Z9 1-547496-0 1 1 National Union Fire Ins.Co.of Bodily Injury&Liability $ 1,000,000 Pittsburgh,PA Hangar Keepers $ 1,000,000 I Pol.#AP3229456-17 Travelers I Deluxe Property-Buildings,business personal property and equipment breakdown(including Pol.#H-630-500M7740-TIL-11 boiler and machinery) $30,606,664 1 Business Income $ 2,290,175 I Pol. #BA-509M748-11-PUB Vehicles&Equipment Liability $ 1,000,000 Medical payments $ 5,000 Uninsured motorists $ 1,000,000 IPol.#H-630-500M7740-TIL-11 Inland Marine-Equipment $ 2,682,416 I ITT Hartford Crime Policy Pol. #37BPEAG4896 Employee theft-per employee $ 100,000 I Chartis Public Officials and Employment Practices Liability Pol. #WED4KS007299305 Each claim $ 2,000,000 Aggregate limit $ 2,000,000 IGreat American Alliance Ins. Co. Kansas Underground Storage Tank Liability Pol.#KST 788-29-33-17 Environmental Incident $ 1,000,000 1 I Annual aggregate $ 1,000,000 Limit of defense $ 100,000 I American Safety Insurance Pol. #179E01178-09-02 Storage Tank Pollution Liability Coverage Per confirmed release limit $ 1,000,000 Policy aggregate limit $ 1,000,000 Limit of defence $ 250,000 I I 1 61 I I I I I I I I (THIS PAGE INTENTIONALLY LEFT BLANK) I I I I I I I I I 62 I wow • Statistical _ , - • • • • 1 7t >s. 77. /11.117A14.— Ali sr- Salina, Kan., (February 9, 2011) — Representatives of the Salina Airport Authority, City of Salina, Saline County, Great Plains Joint Training Center and the Salina Area Chamber of Commerce met with area press to discuss an economic impact study conducted by the Center for Economic Development and Business Research, W. Frank Barton School of Business, Wichita State University. "We submit data related to all business, military and university-related jobs and activities (for direct t1' J impact data)," said Salina Airport Authority Executive Director Tim Rogers,A.A.E. Today, the total employment impact of the Salina Airport and Airport Industrial Center exceeds 10,000 workers and more than $323 million in annual payroll. Net tax impacts are estimated at nearly $16 million when combining impacts to Salina, Saline County and Kansas. Taxes to the city of Salina exceed $2 million while taxes to Saline County are more than $1.5 million. The state of Kansas realized more than $12.1 million in net taxes. I STATISTICAL r 2011 I STATISTICAL I This part of the Salina Airport Authority's comprehensive annual financial report presents detailed I information as a context for understanding what the information in the financial statements,note disclosures and required supplementary information says about the government's overall financial health. IFinancial Trends 64-68 I These schedules contain trend information to help the reader understand how the government's financial performance and well-being have changed over time. 1 Debt Capacity 69 I This schedule presents information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future I Revenue Capacity 70-72 IThese schedules contain information to help the reader assess the government's revenue source IOperating Information 73 This schedule contains service and infrastructure data to help the reader Iunderstand how the information in the government's financial report relates to the services the government provides and the activities it performs. IDemographic and Economic Information 74-77 These schedules offer demographic and economic indicators to help the reader I understand the environment within which the government's financial activities take place. I I I I I 63 I STATISTICAL FY 2011 SALINA AIRPORT AUTHORITY I TOTAL ANNUAL REVENUES,EXPENSES AND CHANGES IN NET ASSETS FOR YEARS ENDED DECEMBER 31, 2002 2003 2004 TOTAL REVENUES OPERATING REVENUES I Airfield 4,514 190,367 204,310 Fuel flowage fees 278,948 257,475 235,362 IBuilding and land rent 1,034,989 916,585 890,631 Other revenue 39,173 29,501 21,874 TOTAL OPERATING REVENUES 1,357,624 1,393,928 1,352,177 TOTAL EXPENSES OPERATING EXPENSES Administrative 751,734 825,064 928,769 Maintenance 430,530 475,204 465,326 TOTAL OPERATING EXPENSES 1,182,264 1,300,268 1,394,095 I OPERATING INCOME BEFORE DEPRECIATION 175,360 93,660 (41,918) DEPRECIATION 974,140 1,022,474 1,151,664 I OPERATING LOSS (798,780) (928,814) (1,193,582) NON-OPERATING INCOME AND(EXPENSES) I Mill levy 817,499 987,970 1,036,579 Interest on investments and financing lease 147,763 128,640 126,949 1 Interest expense (319,167) (344,353) (348,784) Gain(loss)on sale of assets 29,455 (6,631) 59,943 TOTAL NON-OPERATING INCOME AND (EXPENSES) 675,550 765,626 874,687 1 INCOME(LOSS)BEFORE CAPITAL CONTRIBUTIONS (123,230) (163,188) (318,895) CAPITAL CONTRIBUTIONS 144,005 434,763 2,289,342 I NET ASSETS Increase in Net Assets 20,775 271,575 1,970,447 I TOTAL NET ASSETS,beginning of year 19,737,698 19,758,473 20,030,048 Invested in capital assets,net of related debt 15,418,378 17,711,718 1 8,468,297 Restricted 85,000 85,000 85,000 Unrestricted 4,255,095 2,233,330 3,447,198 TOTAL NET ASSETS,end of year $19,758,473 $20,030,048 $22,000,495 I I I 64 1 STATISTICAL FY 2011 ISALINA AIRPORT AUTHORITY TOTAL ANNUAL REVENUES,EXPENSES AND CHANGES IN NET ASSETS IFOR YEARS ENDED DECEMBER 31, 2005 2006 2007 2008 2009 2010 2011 1 237,506 263,524 376,553 470,182 502,193 654,786 613,721 I 259,981 247,740 246,113 210,292 165,443 191,027 167,569 1,106,146 1,294,166 1,525,071 1,407,984 1,402,230 1,497,330 1,491,710 49,654 70,605 53,772 47,591 28,710 48,206 33,965 1 1,653,287 1,876,035 2,201,509 2,136,049 2,098,576 2,391,349 2,306,965 I1,039,270 1,043,176 1,161,530 1,303,374 1,352,357 1,414,922 1,385,079 618,346 627,546 807,485 941,926 867,771 821,798 771,450 1 1,657,616 1,670,722 1,969,015 2,245,300 2,220,128 2,236,720 2,156,529 I (4,329) 205,313 232,494 (109,251) (121,552) 154,629 150,436 1,392,316 1,580,750 1,650,187 1,606,811 1,748,348 2,290,253 2,407,566 (1,396,645) (1,375,437) (1,417,693) (1,716,062) (1,869,900) (2,135,624) (2,257,130) 1,058,688 1,184,481 1,201,602 1,256,816 1,327,647 1,768,154 1,795,660 1 118,087 148,936 241,478 185,215 74,313 9,948 9,856 (374,851) (500,431) (774,315) (1,022,539) (1,014,129) (1,003,998) (983,982) 204,083 10,777 281,803 16,321 - (86,067) 19,039 1 1,006,007 843,763 950,568 435,813 387,831 688,037 840,573 (390,638) (531,674) (467,125) (1,280,249) (1,482,069) (1,447,587) (1,416,557) 1 3,186,636 1,204,559 404,773 1,650,041 3,770,558 1,172,507 457,227 1 2,795,998 672,885 (62,352) 369,792 2,288,489 (275,080) (959,330) 22,000,495 24,796,493 25,469,378 25,407,026 25,776,818 28,065,307 27,790,227 1 24,193,395 24,442,779 13,515,783 24,471,896 26,410,681 23,717,291 22,084,333 85,000 85,000 I 518,098 941,600 11,891,243 1,304,922 1,654,626 4,072,936 4,746,564 $24,796,493 $25,469,378 $25,407,026 $25,776,818 $28,065,307 $27,790,227 $26,830,897 I I 1 65 I STATISTICAL FY 2011 SAUNA AIRPORT AUTHORITY I CHANGES IN CASH AND CASH EQUIVALENTS FOR YEARS ENDED DECEMBER 31, 2002 2003 2004 1 CASH FLOWS FROM OPERATING ACTIVITES Cash received from providing services $1,503,652 $1,374,310 $1,459,696 I Cash paid to employees for services (450,013) (462,822) (472,178) Cash paid to suppliers for goods and services (748,272) (837,530) (871,435) NET CASH PROVIDED (USED)IN OPERATING ACTIVITIES 305,367 73,958 116,083 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of property,plant and equipment (2,176,229) (2,319,249) (4,126,043) Purchases in satisfaction of maintenance agreement (19,095) (9,736) (5,863) Proceeds from capital grants 144,005 434,763 2,289,342 Return of capital grant proceeds - - - Proceeds from property tax 817,499 987,970 1,036,579 Proceeds from sale of capital assets I Principal payments on debt (694,761) (1,046,750) (988,922) Proceeds of new borrowing 3,200,235 - 3,255,000 Principal received on financing lease 75,541 81,911 88,823 I Interest received on financing lease 113,905 107,535 100,623 Principal received on long-term note - - - Principal received on refunding debt - - - Bond defeasance and issue costs paid (26,119) - (6,147) Interest paid on long-term bonds (262,795) - - Interest paid on long-term debt - (338,703) (294,691) NET CASH PROVIDED (USED) IN CAPITAL AND RELATED FINANCING ACTIVITIES 1,172,186 (2,102,259) 1,348,701 1 CASH FLOWS FROM INVESTING ACTIVITES; Interest received on deposits 30,921 25,475 28,960 I NET INCREASE (DECREASE)IN CASH AND CASH EQUIVALENTS 1,508,474 (2,002,826) 1,493,744 1 CASH AND CASH EQUIVALENTS,beginning of year 1,962,628 3,471,102 1,468,276 1 CASH AND CASH EQUIVALENTS, end of year $3,471,102 $1,468,276 $2,962,020 I Note: In 2010, the SAA began classifying the sale of assets as "non-operating" income. I I 66 III STATISTICAL FY 2011 I SALINA AIRPORT AUTHORITY CHANGES IN CASH AND CASH EQUIVALENTS FOR YEARS ENDED DECEMBER 31, I2005 2006 2007 2008 2009 2010 2011 I $2,107,817 $1,993,164 $ 4,588,310 $ 2,426,455 $ 1,974,744 $2,374,283 $ 2,466,747 (504,691) (552,966) (638,839) (790,936) (830,298) (825,454) (812,393) (1,157,454) (1,087,149) (1,281,618) (1,475,036) (1,457,074) (1,136,760) (1,315,871) 445,672 353,049 2,667,853 160,483 (312,628) 412,069 338,483 I (5,948,674) (5,130,780) (3,242,102) (8,663,391) (6,999,968) (3,471,985) (1,962,366) (1,350) (15,143) (21,601) (7,912) (3,445) - 1 3,186,636 1,204,559 404,773 1,552,002 3,674,507 1,077,310 443,681 1,058,688 1,184,481 1,201,602 1,256,816 1,327,647 1,768,154 1,795,660 1 (86,067) 19,039 (4,388,400) (1,019,673) (1,048,833) (3,946,317) (4,739,437) (8,162,886) (12,756,306) I 3,635,000 3,350,000 12,007,599 - 96,320 104,453 113,279 8,012,154 11,675,000 14,060,137 122,855 133,242 144,485 93,126 84,993 76,167 66,592 56,204 - - I - (22,183) (13,024) (59,955) - (75,986) (39,535) (103,580) 1 (356,080) (407,795) (376,499) (1,249,490) (922,725) (1,145,591) (754,537) 1 (2,646,917) (657,929) 9,054,430 (10,868,845) 462,193 1,758,885 741,728 1 25,463 68,896 182,515 125,309 15,550 9,948 9,856 1 (2,175,782) (235,984) 11,904,798 (10,583,053) 165,115 2,180,902 1,090,067 1 2,962,020 786,238 550,254 12,455,052 1,871,999 2,037,114 4,218,016 $ 786,238 $ 550,254 $ 12,455,052 $ 1,871,999 $ 2,037,114 $4,218,016 $ 5,308,083 I I t 1 67 I STATISTICAL FY 2011 1 CA 6 I '~ "J' .4. m d' O\ ON O 0 h 00 .r 0: -4.e ,-. 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H s. o O. � O CN CT, N N N O a) el it 00 s s 01 00 00 00 M O O cks N (-4 N N N N N 4 U W G a) A tin ao © M en N > k Cr, co at ►r 00 y UV1 4 kkr, n kr, tr) N N h O a) A W C 4. � N M M D1 N N j O 6, N ~ g � O O Qi O � r N N N N N N N N N N O U `V W .$ a Q 14 cD N — t C\ kr1 N en N v0 p 01 0 V') 00 N N v1 N d en N •^ �D O 00 v'1 CN M M en O GC G V1 00 00 00 N N 0+ .--- — F ("1, CA U N N N N N N N en en M Z al M - W 73.6 W q o • 0 b o o ▪ W a E" i4 a 00 a) b0 iii 11 ' V 4.) fti N M tn \O N 00 Cr, O .-. -W b LA ea N N N N N N N N N 7�0/ W e N 4 w cO I i I I STATISTICAL FY 201 I Salina Airport Authority Principal Customers Year Ended December 31,2011 I2011 2002 % of Operating& %of Operating& IDirect Finance Lease Direct Finance Lease Company Revenue Rank Revenue Revenue Rank Revenue Kansas Military Board $589,028 1 25.53% - - - I Hawker Beechcraft Corp.(formerly Ill Raytheon Aircraft Co.) 236,473 2 10.25% 260,216 1 16.82% Learjet Inc. 187,108 3 8.11% - - - ICAV Aerospace,Inc. 168,756 4 7.32% - - - JRM Enterprises,Inc,d/b/a America Jet (formerly Moore's Midway Aviation) 156,849 5 6.80% 188,849 3 12.21% IFlower Aviation 141,709 6 6.14% 143,310 4 9.26% Schwan's Global Supply Chain 107,179 7 4.65% 86,097 5 5.57% Two Rivers Vending Co.,Inc. 53,210 8 2.31% 20,935 10 1.35% ICanadian Royal Air Force 51,109 9 2.22% - - - Kansas State University-Salina 44,496 10 1.93% 219,719 2 14.20% I I I I I I I I I I 1 71 I STATISTICAL vv 2011 I Salina Airport Authority MILL LEVY REVENUE Ten Years Ended December 31,2011 Mil Levy I Fiscal Year Revenue 2002 817,499 I 2003 987,970 I 2004 1,036,579 2005 1,058,688 I 2006 1,184,481 I 2007 1,201,602 2008 1,256,816 I 2009 1,327,647 , 2010 1,768,154 1 2011 1,795,660 Source: Salina Airport Authority Records I II I I I 72 I STATISTICAL FY 2011 I Salina Airport Authority I AIR TRAFFIC,FUEL FLOWAGE AND ENPLANEMENT TRENDS Ten Years Ended December 31,2011 I Passenger Enplanements Fiscal Air Traffic Fuel Flowage Scheduled Non-Scheduled Total Year Operations Gallons Air Carrier Air Carrier Enplanements I2002 95,801 4,695,093 2,439 899 3,338 I2003 86,214 4,358,563 2,558 2,405 4,963 2004 81,465 3,843,330 2,802 3,299 6,101 2005 86,292 4,162,887 2,346 459 2,805 2006 81,464 3,817,112 1,854 1,023 2,877 I2007 76,479 3,778,792 2,504 1,623 4,127 1 2008 71,575 3,114,515 3,673 1,497 5,170 2009 65,062 2,481,585 2,447 421 2,868 1 2010 60,451 2,763,990 1,698 1,446 3,144 1 1 ' 2011 69,207 2,386,134 2,705 - - Note: IOne air traffic operation equals one aircraft takeoff and landing Sources: Salina Airport Authority Records 1 Federal Aviation Administration Office of Airport Planning and Program 'FAA non-scheduled air carrier data not available until July of the following calendar year I I I I 1l 1 73 I STATISTICAL FY 2011 I Salina Airport Authority Principal Employers Current Year and Five Years Prior 2011 20061 Percentage of Percentage of Total City Total City I Employer Employees Rank Employment Employees Rank Employment I Schwan's Global Supply Chain, Inc. 1,800 1 5.2% 1,800 1 5.1% USD#305 1,659 2 4.8% 1,659 2 4.7% Salina Regional Health Center 1,300 3 3.8% 1,600 3 3.7% Exide Technologies 750 4 2.2% 750 4 2.1% Philips Lighting Company 490 5 1.4% 490 7 1.4% City of Salina 465 6 1.3% 723 5 2.0% I Wal-Mart 421 7 1.2% 421 8 1.2% Dillons Stores 343 8 1.0% - - 0.0% Solomon Corporation 324 9 0.9% - - - Great Plains Manufacturing 250 10 0.7% - - - Blue Beacon International - - - 544 6 1.5% Asurion, Inc. - - - 374 9 1.0% Hawker Beechcraft Corp. - - - 350 10 1.0% 1 Total 7,802 22.5% 8,711 23.7% Source: Salina Area Chamber of Commerce 1 - 2002 Historical records not available I I I I I I 74 I I STATISTICAL FY 201 1 • Salina Airport Authority Full-time Equivalent Government Employees by Function Last Ten Fiscal Years LFull-time Equivalent Employees as of December 31 Function 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 IAdministration 4 4 4 4 4 5 6 7 7 7 7 t1 Aircraft Rescue and Firefighting(ARFF) and 111 Operations 4 3 3 3 3 3 6 6 6 5 5 1 Airport and Industrial Center Maintenance 4 4 4 4 4 4 5 5 5 5 5 Total 12 11 11 11 11 12 17 18 18 17 17 Total ISource: Salina Airport Authority Records 1 During years 2001-2007,the ARFF and Airport and Industrial Center Maintenance duties were a combined function. i i 1 t 1 75 I STATISTICAL FY 2011 1 M I 1 N N O M M N N co a\ - O 00 N 7 M M a, co N I ..., N� Vl M dt M N N M N O a1 a1 2. w a as a I M,. o 0 0 0 o 0 0 1 ++ O V', O N N O d' c' 6 CI Q\ O N O Vl v::; d . z a 00000 C C. co I N III p ,w o o 0 0 0 0 0 0 - . a. et N � a, � 00 ay 4 7t' 4 4 M M M \O O 1 tk o 1 ,.D a, O M ,O a, N N N 00 oil i \O \O N N N N 00 N N N M M M M M M M M M M I O 0 0 0 0 0 0 0 O p 0 00 0 0 0 0 0 0 O , 0 0 0 0 0 0 0 0 0 I 4) 00 vi 00 N M V'" N O co y a, a. N N O. 00 VD O N cd a u a. M N .--. O Vl N l--;, V's ~ 0 8 kn C Val 0(4 — O O O. CVl V- l O, O ,--1 �-+ cn ,--i ,--+ ,-4 s--1 N N N Fii I col c- .- co CC p U I ¢ 0 0 0 © © © © vNl 0000 0 .v.) " - N \O kr, M l l M 0 CQ 00 00 d1 �--1 M M \O 00 a. 00 0 6 A N N N M M M M M M W I C a y o 0 v w p., 0 TI 0 a: N cd y 1 v 0:1 .,.., .... .� O2 O N M a1 O M N r}' \O N V 0 ,-� M O ,-g N 00 Vl �D O O, N 0 up - O I a .fir a1 t a a �D M �D O ti) ,-, w - ' D M M M en d- VD 'C 4. 0 �" Vl Vl Vl Vl Vl Vl Vl Vl Vl Vl 0 •.z 0 O con � A � 0 0 I el "' a a r0 I• 0 0 Q o w 6 N M d' kn 00 a O o A 4 cd V a9 c1000000004-1 ,-4 0 cr, cn O I a 4) 0 0 0 0 0 0 0 0 0 0 O E-4 �+ N N N N N N N N N N c�, y U - - r w et znvA0 A W s 76 I I ISTATISTICAL 1 7 1" 2 0 1 1 Largest Taxpayers IAccording to the Saline County Clerk's Office, the following table lists the largest taxpayers in the City, their 2011 assessed valuations, and the percentage each taxpayer comprised of the total assessed valuation of the City. IValuation Valuation Schwan's Sales (Tony's Pizza) Frozen Pizza $ 8,189,411 1.82% I Coyote Garrison Salina LLC Regional Shopping Center 6,254,037 1.39% Salina Regional Health Center Hospital and Medical 6,234,437 1.39% Offices ' Westar Energy Utility 4,294,726 0.95% Kansas Gas Service Utility 3,762,052 0.84% Gateway Adams Inc. (Midstate Shopping Center 3,566,208 0.79% I Plaza) Wal-Mart Stores (Includes Sam's) Discount Retail 3,465,983 0.77% Southwestern Bell Telephone Utility 2,655,148 0.59% IGreat Plains Manufacturing Agricultural Equipment 2,074,617 0.46% S&B Motels Hotel 2,064,471 0.46% I $42,561,090 9.46% Property Tax Collections Tax statements are mailed November 1 each year and may be paid in full or one-half on or before IDecember 20 with the remaining one-half due on or before May 10 of the following year. Taxes that are unpaid on the due dates are penalized at a statutorily prescribed rate until paid or until the property is sold for taxes. Real estate bearing unpaid taxes is advertised for sale in July of each year and is sold by the County for taxes and all legal charges on the first Tuesday in September. Properties that are sold and not redeemed within two years after the tax Isale are subject to foreclosure sale, except homestead properties which are subject to foreclosure sale after three years. I Personal property taxes are assessed, due and may be paid in the same manner as real estate taxes. Motor vehicle property taxes are based on valuations provided by the Kansas Department of Revenue and the county average tax rate for the county in which the vehicle is registered. Motor vehicle taxes are payable to the county treasurer at the time of the vehicle's annual registration. Vehicle registration dates are assigned by the State in a Imanner such as to equal registration over a twelve-month period. Motor vehicle taxes are distributed by the county to the state, city and other taxing jurisdictions based on their proportionate tax levies. Delinquent personal and motor vehicle taxes are penalized at the same rate as delinquent real property taxes. The following is a summary of tax collections for the Authority in the years shown. I Current Current and Delinquent Levy Tax Taxes Tax Collections Tax Collections Year Rate Levied Amount % Amount %o I2011 4.007 $1,612,235 $708,718 43.9% $708,718 43.9% 2010 4.055 1,623,007 1,574,961 97.0 1,614,823 99.5 2009 4.315 1,717,272 1,625,184 94.6 1,673,940 97.5 2008 2.877 1,152,432 1,091,975 94.8 1,124,734 97.6 I 2007 2.877 1,131,545 1,073,715 94.9 1,105,926 97.7 2006 2.877 1,091,961 1,045,911 95.8 1,077,288 98.7 2005 2.941 1,039,000 1,007,688 97.0 1,037,919 99.9 I 2004 2.795 939,174 915,175 97.4 942,630 100.4 2003 2.795 919,639 899,014 97.8 921,402 100.2 2002 2.806 891,465 870,085 97.6 897,286 100.6 ISource: City of Salina *As of June 18, 2012 1 77 1 I 1 1 I I 1 I (THIS PAGE INTENTIONALLY LEFT BLANK) • I I 1 I I 1 I 78 I I, it Compliance n, •.. ...... , ,,,,,, , ..!„,, p ,i, ... ,..ilif, , ____ ioggiv .„.,,, ■f h i F., TPc.? /1 ..i. ___) _- f` ~ i :g�,, k - �' Salina, Kan., (May 20, 2011) — Troopers from the Kansas Highway Patrol Air Support Unit recognized the Salina Airport Authority maintenance crew for their outstanding assistance during the winter months with a certificate of appreciation, May 16 at the M. J. Kennedy Air Terminal Building. "The efforts of Loren Carleton and his maintenance team are greatly appreciated" said East Region Commander Major Mark Goodlowe. "It is my understanding that these gentlemen ensure snow and ice are removed from the hangar door area. They have provided urea ice melt when necessary. They have Iassisted Technical Trooper Joe Ziegler in pushing the KHP aircraft into the hangar during the winter months when icy conditions did not permit the use of a tractor. I am extremely pleased to know that the relationship between the Kansas High Patrol and Salina Airport Authority is such that helpful assistance is offered when needed." The Kansas Highway Patrol and the Salina Airport Authority have always enjoyed a great partnership. The Kansas Highway Patrol Air Support Unit could be needed for a litany of circumstances regardless of weather or season. CLUBINE& I RETTELE , CHARTERED REPORT ON INTERNAL CONTROL OVER FINANCIAL I Certified Public Accountants REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH IGO VERNMENT AUDITING STANDARDS To the Board of Directors ISalina Airport Authority Robert I. Clubine, C.P.A. We have audited the financial statements of Salina Airport Authority as of and for I David A. Rettele,C.P.A. the years ended December 31, 2011 and 2010, and have issued our report thereon Jay D. Langley,C.P.A. Jon K. Bell,C.P.A. dated June 14, 2012. We conducted our audit in accordance with auditing Leslie M. Corbett,C.P.A standards generally accepted in the United States of America and the standards Stacy J.Osner,C.P.A. applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and the Kansas Municipal Audit Marci K. Fox,C.P.A. John T.Millikin,C.P.A. Guide, prescribed by the Director of Accounts and Reports, Department of ' Linda A.Suelter,C.P.A. Administration of the State of Kansas. Internal Control Over Financial Reporting I Management of the Salina Airport Authority is responsible for establishing and g rP P maintaining effective internal control over financial reporting. In planning and I performing our audit, we considered Salina Airport Authority's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the I purpose of expressing an opinion on the effectiveness of the Salina Airport Authority's internal control over financial reporting. Accordingly,we do not express an opinion on the effectiveness of Salina Airport Authority's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control 218 South Santa Fe P.O. Box 2267 does not allow management or employees, in the normal course of performing their Salina, Kansas assigned functions, to prevent or detect and correct misstatements on a timely basis. 67402-2267 A material weakness is a deficiency, or a combination of deficiencies, in internal I control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a Salina timely basis. I 785/825-5479 Salina Fax Our consideration of internal control over financial reporting was for the limited 785/825-2446 re p g purpose described in the first paragraph of this section and was not designed to I Ellsworth 785/472-3915 identify all deficiencies in internal control over financial reporting that might be Ellsworth Fax deficiencies, significant deficiencies or material weaknesses. We did not identify 785/472-5478 any deficiencies in internal control over financial reporting that we consider to be Imaterial weaknesses, as defined above. I 79 1 Compliance and Other Matters As part of obtaining reasonable assurance about whether Salina Airport Authority's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly,we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of the audit committee,the board of directors, management, others within the organization,the City Commission and federal awarding agencies and pass- through entities and is not intended to be and should not be used by anyone other than these specified parties. CLUBINE AND RETTELE, CHARTERED 1 axmi '' ' ' Iaia,r,ferta Salina. Kansas June 14, 2012 I 1 I 1 I I 1 1 80 I SaUna • Airport Authority .F HP • Salina, Kan., (September 28, 2011) — Soldiers from Fort Riley's Combat Aviation Brigade held a forward arming and refueling point, known as a FARP, operation at Salina Municipal Airport to aid in training exercises at the Smoky Hill Air National Guard Weapons Range during September. A FARP is a temporary location organized, equipped and deployed that is normally located closer to the area of operation than the aviation unit's combat service area to support tactical combat operations. The Salina Municipal Airport provided an ideal location for the OH-58 Kiowa Warriors and the UH-6o Blackhawks to conduct this training due to its position between Fort Riley and the weapons range. Salina Airport Authority recently installed six new helipads, which aid in these types of training activities. "Setting up the FARP on the Salina Airport enabled us to utilize the National Guard Resources on the airfield," said Sgt. 1st Class Jeff Troth, a public affairs spokesman. "Not only did it allow us faster refueling for our training in the weapons range, but it also gives the soldiers who fuel the helicopters practice in this area." r,7 . . . _ _. _ _.: . , -. ...,.. , ...._ , , , , , .. _ , ., . ,,__ . ._, . . , ......,. __. . . , frport ....,, .---..... 741i/f/a40/4 —,—,—, .,,, „, , . . .,, , ,.... „.. ,...,.. ,, , ,...,.,, . ,. a ...,..,,_ ,,. ,.., .7.., ,,_ I.. -, irj,ort SA LlNA A Municipal / Aviation SLNAfrport SLN :, . „, _ ,. ■,. ....—....----_-- ...,.,\..,,_.. .---.....,---- .‘ ,..,..,- ,, _._. .... ,- ,. ... , _. . -._,, ,„. ,_ _. - ..,, , , ...., . . .,_, a „. ,.... ...... _ ,.. . , , . .. , ,,,, . . ,.,„...... ... . . Center 3237 Arnold I Salina, KS 67401 I 785-827-3914 www.salinaairport.com I www.flysalina.com